1. You are the strategy and expansion manager for Econ Motorbikes. You are evaluating whether to develop a new motorbik

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1. You are the strategy and expansion manager for EconMotorbikes. You are evaluating whether to develop a newmotorbike line in India or to export the existing motorbike line toIndia (bike produced at headquarters in the USA). Thenew motorbike line in India would be developed based on localcustomer preferences. The existing motorbike that youwould export does not align well with local customerpreferences. The CFO informs you the current weightedaverage cost of capital is 10%.
A. The CEO requests that you determine if the options arefinancially feasible and which one is bestfinancially. You need to show this quantitatively (CEOuses evidence-based decision-making strategies, nothunches).
Here is the data needed:
Option 1 – Develop a new motorbike inIndia.
WACC (cost of capital)=10%
-Initial Investment - $10,000,000
-Forecasted profits:
Year 1=100,000
Year 2=250,000
Year 3 =500,000
Year 4 =1,000,000
Year 5 = 2,000,000
Year 6=2,000,000
Year 7 =5,000,000
Year 8 =5,000,000
Year 9=5,000,000
Year 10=5,000,000
Option 2 - Expanding offerings of an existing product toIndia.
-Initial Investment - 0
-Forecasted profits:
Year 1= 50,000
Year 2=100,000
Year 3=150,000
Year 4=200,000
Year 5=200,000
Year 6=200,000
Year 7=200,000
Year 8 =200,000
Year 9=200,000
Year 10=200,000