Campbell Soup is considering expanding its international presence. It sells 38 percent of the soup consumed in the United States, but only 2 percent of soup worldwide. Thus, the company believes that it has great potential for international sales. Recently, 20 percent of Campbells sales were in foreign markets (and nearly all of that was in Europe). Its goal is to have 30 percent of its sales be in foreign markets. In order to accomplish this goal, the company will have to invest heavily.

In recent years Campbell has spent between P300 and P400 million on capital expenditures. Suppose that Campbell is interested in expanding its South American presence by building a new production facility. After considering tax, marketing, labor, transportation, and political issues. Campbell has determined that the most desirable location is either in Buenos Aires or Rio de Janiero. The following estimates have been provided: