The CFO of Roland GmbH wants to develop and grow the business and has two mutually exclusive alternatives to choose from The first option would be to enlarge the plant in Germany and buy a new building This involves an initial cost of $3,000,000 and is expected to generate $125,000 a month in revenue for the next 3 years at a discount rate of 6 compounded annually Alternatively, the company could invest the $9,000,000 to build a new factory in the US and enter the American market This will generate $200,000 a month in revenue and last for the next 6 years Decide which is the best choice between A or B Your result must be supported by using the correct capital budgeting model and calculating the results of both A and B You may use the excel to Determine the best choice by NPV Determine the best choice by PI Determine the best choice by IRR Determine the best choice by Payback

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Posted on Oct 02, 2024

The CFO of Roland GmbH wants to develop and grow the business and has two mutually exclusive alternatives to choose from: The first option would

The CFO of Roland GmbH wants to develop and grow the business and has two mutually exclusive alternatives to choose from:

The first option would be to enlarge the plant in Germany and buy a new building. This involves an initial cost of $3,000,000 and is expected to generate $125,000 a month in revenue for the next 3 years at a discount rate of 6% compounded annually.

Alternatively, the company could invest the $9,000,000 to build a new factory in the US and enter the American market. This will generate $200,000 a month in revenue and last for the next 6 years.

Decide which is the best choice between A or B. Your result must be supported by using the correct capital budgeting model and calculating the results of both A and B.

You may use the excel to: