Show calculations. Valles Global Industries has recently begun expansion in athl

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Show calculations.

Valles Global Industries has recently begun expansion in athletic wear. They are planning to market and sell a new Bluetooth-enabled running shoe with various lightweight sensors in two markets: national and international. The local market will require an initial investment and will have cash inflows for three years. If things work out, they will invest in an expansion and sell internationally, expecting benefits for four years. Assume a MARR of 10% and a risk-free interest rate of 5 %. Consultants suggest that the volatility of the cash flows is between 35% and 50%. Discuss their expansion strategy. Year Invest $60 Million $20 Million $22 Million $24 Million Invest $160 Million for international growth $60 million $85 Million $100 Million $120 Million 0 4

Explanation / Answer

The NPV remains positive at all volatility rates This is profitable strategy.

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