Accounting rate of return on investment

Assignment Help Managerial Accounting

Reference no: EM131287845

Question:

Garrison Appliances, Inc.

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 organization 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, India follow:

Possible Location     Mumbai       Bangalore
Initial cash outlay    $5,000,000    $2,800,000
Useful life                  20 years        20 years
Net cash inflows excluding depreciation
                                $1,100,000     $860,000
The cost of capital            9%             9%
Tax rate                           40%           40%

The Assignment:

Part 1: Prepare a spreadsheet using Excel or a similar program in which you compute the following for each proposed location:

Accounting rate of return on investment
Payback
Net present value
Internal rate of return

Reference no: EM131287845

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