Week 3 Assignment
Northwood 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, Jakarta, Indonesia and Bangkok, Thailand follow:
|
Possible Location |
Jakarta, Indonesia |
Bangkok, Thailand |
|
Initial cash outlay |
$3,500,000 |
$3,000,000 |
|
Useful life |
20 years |
20 years |
|
Net cash inflows excluding depreciation |
$750,000 |
$830,000 |
|
The cost of capital |
9% |
9% |
|
Tax rate |
40% |
40% |