Question
1. You are the strategy and expansion manager for Econ Electric Scooter. You are evaluating whether to develop a new electric scooter line Bangladesh or
1. You are the strategy and expansion manager for Econ Electric Scooter. You are evaluating whether to develop a new electric scooter line Bangladesh or to export (scooters produced at headquarters in the USA). The new scooter line in Bangladesh would be developed based on local customer preferences. The existing scooter made in the USA, that you would export, does not align well with local customer preferences. The CFO states the current weighted average cost of capital (WACC) is 10%.
A. The CEO asks for you to determine if the options are financially feasible and which one is best.Analyze quantitatively (CEO uses evidence-based decision-making strategies, not hunches).
Option 1 - Expand a new scooter line in Bangladesh through a cross-border acquisition.
WACC (cost of capital) =10%
-Initial Investment - $50,000,000
-Forecasted profits:
Year 1=1,00,000
Year 2=5,250,000
Year 3 =5,500,000
Year 4 =6,000,000
Year 5 = 7,000,000
Year 6=8,000,000
Year 7 =13,000,000
Year 8 =15,000,000
Year 9=15,000,000
Year 10=15,000,000
Option 2 - Expanding offerings of an existing product (made in USA) to Bangladesh (export strategy).
-Initial Investment = 0
-Forecasted profits:
Year 1= 500,000
Year 2=600,000
Year 3=750,000
Year 4=800,000
Year 5=800,000
Year 6=800,000
Year 7=900,000
Year 8 =900,000
Year 9=1,000,000
Year 10=1,000,000
Please explain how to achieve this via Excel?
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