Your firm has recently reached an expansion phase and is seeking possible new geographic regions to market the newly patented chemical compound Glupto. The five regional projections are as follows:

a. Which regions would be profitable to the firm?
Which of the five is the most profitable?

b. If current budgeting can support a $100 million expenditure in year 0, what combination of regions is optimal?

c. Assume now that you can expand without regional saturation. With the budget constraint in part

b, which region is optimal?AppendixLO1

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Cash Flows (in $millions) Years from Now: 0 1 2 3. 4 5 Northeast -95 15 20 Midwest -75 15 20 20 25 30 30 20 25 30 Southeast -60 10 15 20 20 25 West Coast -35 5 10 10 15 15 Southwest -20 5 5 6 6 10 Zero-coupon yields (%) 6.5% 7% 7% 7.5% 8%