Question: In October 2010 BMW announced plans to spend 1
In October 2010, BMW announced plans to spend $ 1 billion to expand production at its plant in South Carolina. The plant produced the second generation BMW X3 as well as the company’s X5 and X6 models. BMW apparently felt it would be better able to compete and create value with a U. S.–based facility. In fact, BMW actually expected to export 70 percent of the X3s produced in South Carolina. About the same time, Samsung Electronics announced plans to build a $ 3.6 billion plant in Texas, and Novartis announced plans to open a $ 1 billion- plus plant in North Carolina. What are some of the reasons that foreign manufacturers of products as diverse as automobiles, electronics, and pharmaceuticals might arrive at the same conclusion to build plants in the U. S.?
Answer to relevant QuestionsWhat are some of the difficulties that might come up in actual applications of the various criteria we discussed in this chapter? Which one would be the easiest to implement in actual applications? The most difficult? An investment project provides cash inflows of $ 840 per year for eight years. What is the project payback period if the initial cost is $ 3,200? What if the initial cost is $ 4,800? What if it is $ 7,300?Suppose you are offered $ 7,000 today but must make the following payments: Year Cash Flows ($) 0 ........ $ 7,0001 ........ - 3,7002 ........ - 2,4003 ........ - 1,5004 ........ - 1,200a. What is the IRR of ...Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for Tokyo Rubber Company is 10 percent.a. Based on the payback period, which project should be taken? ...a. Calculate the payback period in a table. The first three columns of the table will be the year, the cash flow for that year, and the cumulative cash flow. The fourth column will show the whole year for the payback. In ...
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