ACTIVITY Answer the following items and write your answers on a separate sheet of paper. Show your computations. (11 items x 5 points) Jolly Soup is considering expanding its international presence. It sells 38% of the soup consumed in the Philippines, but only 2% of soup worldwide. Thus, the company believes that it has great potential for international sales. Recently, 20% of Jolly's sales were in foreign markets and nearly all of that was in Asia). Its goal is to have 30% of its sales in foreign markets. In order to accomplish this goal, the company will have to invest heavily. In recent years, Jolly has spent between P300 million and P400 million on capital expenditures. Suppose that Jolly is interested in expanding its presence in Europe by building a new production facility there. After considering tax, marketing, labor, transportation, and political issues, Jolly has determined that the most desirable location is either Berlin or Madrid. The following estimates have been provided: Berlin Madrid Initial investment P1,400,000 P2,500,000 Annual revenues 380,000 500,000 Annual expenses 180,000 200,000 Annual cash inflows 430,000 550,000 Annual cash outflows 206,350 222,250 Estimated salvage value 500,000 Estimated useful life 20 years 20 years Discount rate 9% 9% Evaluate each of these mutually-exclusive proposals using: 1. Payback method (2 items) 2. Accounting rate of return method (2 items) 3. Net present value method (2 items) 4. Internal rate of return method (2 items) 5. Profitability index (2 items) 6. After performing all the capital budgeting techniques above, which project is more desirable? Explain your findings. (1 item)