Benefits Of A New Plant

1244 WordsOct 1, 20155 Pages
Proposal one suggests that the company buys one hundred new refrigerated trucks, half in 2001 and the other half in 2002. The company could then sell 60 old trucks over the course of two years for a total of EUR4.05 million. The trucks would be more fuel- efficient and less maintenance. This proposal would make deliveries more frequent, make scheduling more flexible, and support further expansion in the future. Proposal two suggests that a new plant be built that would take the burden off other plants that had to make shipments because demand was higher and it would decrease shipment costs. The cost of the plant would be EUR37.5 million. The new plant’s expected after-tax cash flows would total EUR35.6 million and IRR of 11.3% over 10 years. Proposal three suggests that the plant that is in Nuremberg, Germany be expanded. It would cost a total of EUR15 million. Expanding this facility would increase capacity to an expected EUR2.25 million a year in additional production. Proposal four suggests that the company roll-out a new product of snack foods. The company has excess capacity that it could use to produce dried fruits and enter a new market. The IRR was expected to be 13.4% and the project would be able to support more expansions. Proposal five suggested to increase automation of the production lines at six of the company’s already existing plants. This proposal would reduce injuries amongst employees and reduce lawsuits from injured
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