Task 1 (Capital Investment Appraisal)
Sohar Chemicals LLC, a chemical manufacturing industry which is based in Liwa has a plan to expand its product range by starting a new unit. The company considers a cost of capital of 7% on all its investments. The company has three investment proposals in consideration.
Proposal A (Ammonia Plant):
Capital Investment: 30000 RO
Proposal B (Acetic Acid Plant): Capital Investment: 35000 RO
Proposal C (Sulphuric Acid Plant): Capital Investment: 42000 RO
The expected cashflows of the three projects for a period of 10 years are given in the Table T1.
|Year||Cash Flow of Project A (in RO)||Cash Flow of Project B (in RO)||Cash Flow of Project C (in RO)|
Task 2 (Decision Tree)
A manufacturer of small power tools is faced with foreign competition, which necessitates that they either modify (automate) their existing product or abandon it and market a new product. Regardless of which course of action they follow; they will have the opportunity to drop or raise prices if the company experiences a low initial demand.
Table 2A: Estimates between two alternatives
|Alternative||Modify product||New product|
|Level of demand||Low||High||Low||High|
Table 2B: Estimates when demand for both alternatives are “Low”
|Items||Modify product (if low initial demand)||New product
(if low initial demand)
|Drop price||Raise price||Drop price||Raise price|
|Level of demand||Low||High||Low||High||Low||High||Low||High|
Task 3 : (Depreciation
Swift Aerospace purchased a new aircraft engine diagnostics equipment for its maintenance support facility in France. The installed cost of the equipment was RO 65,000 with a depreciable life of 5 years and an estimated 8% salvage. Determine the following
(Comprehensive presentation of the problem mentioned in the task.)
|2||Discussion, analysis, and recommendation
(Comprehensive discussion and in-depth analysis of the issues.)
|4||Calculations, graphical presentation, diagrams, and analysis
(Accuracy and clearness of calculations, significant graphs and diagrams, and indepth analysis)
|5||English language, writing style, and references
(Overall format and style, spelling and grammar mistakes, and standard referencing style)
Harvard Referencing (CCE Style) First Edition 2013 should be followed for both in-text and listing references. This downloadable document can be found in our NU-CoE portal at: http://coeportal.nu.edu.om/member/contentdetails.aspx?cid=693
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