the managers of tomorrow will not be bigger man than his father was before him

In addition to the WBS and in order to calculate roughly the PEP’s costs, the PMC will be using approximate estimate. The PEP’s cost is estimated by analogy to the Morgan Water Plant Rehabilitation program, in Cleveland, OH, which has a similar scope of work and capacity (Shook Construction 2013) (Kerzner 2013, pg. 680). The total cost for the Morgan Water Plant Rehabilitation program was $26 million; the Baldwin Water Works Plan Enhancement Program is 15 percent more difficult, taking under consideration the delicate work necessary for the renovation of the historical administration building. These result in an estimated cost of $30 million for the completion of our PEP (Kezner 2013, pg. 680) (www.shookconstruction.com). Finally, the PMC identifies two types of budgets: distributed budget is defined by the man-hours an required for the achievement of the tasks and subtasks established in the WBS, and the essential materials and equipment needed (i.e. 2,500 tons of 20” by 48” ductile iron piping, 48” electrically activated valves, PLC-Based control instruments, filter medias, slate shingles, crane, drillers, concrete, iron gunnels, masonry, exterior windows); management reserve of $3 million used in case of escalations in construction workers salaries, unforeseen delays resulting during

Situation Analysis - The Jackson Plant an older, established unit in the Rose Co. has not operated satisfactorily for several years. The Board of

In the same way should be treated cost of $1 million related to dismantlement of the existing manufacturing operation. According to the ASC 420-10-24-14, this cost

* Finance: To build the new plant, the company needs to invest a large amount of capital, thus it should identify whether its current finance is enough for investing or it needs to attract more money. If not, the company may choose some kind of financing such as issuing bond, borrowing money or offering IPOs.

of dividends, and a required return of 10 per cent per annum. The value of each

B. Calculate the relevant cost of the project for Flower. What is the lowest amount the firm should accept for the contact? Explain.

a) How many shares will the firm have to issue, assuming they issue the new shares at the current price per share?

The source of make-up water for the whole plant will be from a river near the power plant .

This is beyond the company cost limit set of $16 million capital and $2.6 million yearly payment for improvement. The company is committed to keep the plant but at the basis on the cost limit set.

The upgrade of the Rotterdam plant involves implementing the Japanese technology and requires a capital expenditure of £8.0 million with £3.5 million spent today, £2.0 million on year one, £1.0 million on year two and £1.0 million on year three. This will also increase polypropylene output by 7% from current levels at a rate of 2.0% per year. In addition, gross margin will improve by 0.8% per year from 11.5% to 16.0%. After auditing the financial models, it is concluded that the static net present value of the upgrade is -£6.35 million using a discount rate of 10% and an expected inflation rate of 3% annually. The Rotterdam upgrade contains an option to switch to the speculated German technology being available in five years. The current value of the option is zero as it is deeply out-of-the-money. The total net present value of the upgrade is -£6.35 million. The incremental earnings per share of the upgrade is £ 0.0013, the payback period is 14.13 years, and the internal rate of return is 18.7%.

The decision maker of the project who is going to decide to implement the provided solution is Linda Metzler, production planning manager of MRL. Her objective is minimizing the cost while keeping the reputation of the company at high levels considering the future of the company. Her decision criteria and performance measures are in detail in the next part and environment related assumptions are described in assumptions.

Linda Metzler the production planning manager is the main responder in this case, she has to come up with another optimal alternative that will have to be submitted to the plant’s General Manager. The plan has to be approved by the general manager for roll out starting next year.

* Production capacity is 10,000 units a year however they hope to construct a $45 million facility with a capacity of

4. For 2008, Aget is contemplating adding two new dry-process kilns for an investment of 10.7 million €. That investment is expected to increase current capacity by 18%.

| Very high, not fitable for our plant because according our make or buy decision, we only make necessary body parts in order to save capital and better focus on “core business”.