Garrison Appliances, Inc.

Garrison Appliances, Inc. is considering expanding its international presence. It sells 25% of all the toaster ovens sold in the United States but only 3% of the toaster ovens sold outside of the United States. The organization believes that it can sell more of its product if it has a production facility located overseas. Estimates concerning two possible locations, Mumbai and Bangalore, India follow:

Possible Location	Mumbai	Bangalore
Initial cash outlay	$5,000,000	$2,800,000
Useful life	20 years	20 years
Net cash inflows excluding depreciation	$1,100,000	$860,000
The cost of capital	9%	9%
Tax rate	40%	40%

Part 1: Prepare a spreadsheet using Excel or a similar program in which you compute the following for each proposed location

Accounting rate of return on investment

Payback

Net present value

Internal rate of return

Part 2: Utilizing Word or another word processing software program, prepare a written report for the Board of Directors. The intended audience is clear from the salutation and the language used throughout the report.

Include a detailed and thorough explanation of the conclusion you reached regarding the feasibility of each proposal supported by the calculations prepared in Part 1.

Explain at leastfive non-financial items (e.g., culture, language, etc.), which may impact the perceived desirability of each location.

Select the one location you recommend the Board invest in. Explain your rationale in precise and detailed language.