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 trained and developed managerial skills of its newly recruited manages 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 team is working closely with the product manager. The
management team understand that is 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 t confirm their belief, the HR manager does extensive research. The analysis shows that extended
business travel will result in $10,000,000 additional 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 break-even
point？