A US Based High Tech Company Has Built a R&D Office

Multiple Choice

A U.S. based high tech company has built a R&D office in Bangalore, India. Four years have passed since the greenfield operation was successfully built. During this time, the new location has taken on higher priority engineering projects and has trained and developed managerial skills of its newly recruited managers in Bangalore. Headquarters wants the office to take on a new engineering project that would expand its business in the U.S. by adding a new product line. This project has been identified as the most important objective for the corporation in the mid-term. The project is still in the phase of identifying specifications and developing milestones, where the engineering management ream is working closely with the product manager. The management team understands that it must create an international assignment program to have this project run smoothly. The team believes that extended business travel would be the most appropriate program. In order to confirm their belief, the HR manager does extensive research. The analysis shows that extended business travel will result in $10,000,000 addition revenue in the first year and $5,000,000 additional revenue in the second year due to the customization of the product to customer demand. The cost of the program is $400,000 initial investment plus a variable cost of $100,000 per year. What is the return on investment in the first year ?

A) 20%
B) 500%
C) 250%
D) 40%