A coffee company based in Malaysia is considering investing in the coffee manufacturing facility in two overseas markets: (1) the Philippines and (2) Indonesia. According to the report for both projects, the board of Directors is deciding which overseas markets they should invest in, so the company feasibility study officer should provide a thorough report for both locations. The project is mutually exclusive.

The first manufacturing facility will be located in the Philippines.

The initial investment in the project is $60,000,000 and the project is expected to have a lifetime of 15 years. The expected revenue is $ 26,000,000 per annum and is expected to grow at 5% every 3 years. The expected cost is $19,500,000 per annum and is expected to grow at 4% every 3 years.

The second manufacturing facility will be located in Indonesia.

The initial cost of this project is estimated at $40,000,000. This project is expected to last for 15 years and generate an income of $22,000,000 per year for the first six years and from the seventh year onwards it increases $750,000 per year until the end of its lifetime and the cost is $16,000,000 per annum and also will increase the same as income.

The discount rate for both initiatives is 7.5%.

Requirements:

Use the appropriate method(s) to evaluate both projects and select your preferred project