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 company 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, follow:

Bangalore:

Years 1-20

	Net Income	Cash Flow
Annual cash savings	$860,000	+$860,000
Depreciation($2,800,000/20)	140,000
Income before tax	$720,000
Tax, 40%	288,000	-288,000
Net Income	$432,000
Annual Net cash flow		$572,000

Average rate of return on investment: Average Investment is (initial cash outlay) / 2 = $x,xxx,xxx (net income) / $x,xxx,xxx = Payback period: Initial investment / Annual net cash flow = x.x years