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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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