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How do you determine the feasibility for each location Delhi and Karachi? Home Appliances, Inc. is considering expanding its international presence. It sells 25% of
How do you determine the feasibility for each location Delhi and Karachi?
Home 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, Delhi, India and Karachi, Pakistan follow:
Possible Location | Delhi, India | Karachi, Pakistan |
Initial cash outlay | $7,000,000 | $4,900,000 |
Useful life | 20 years | 20 years |
Net cash inflows excluding depreciation | $1,550,000 | $1,500,000 |
The cost of capital | 9% | 9% |
Tax rate | 40% | 40% |
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