Alexa believes that the target market of natural essential oils and perfumes is also looking for all$-$natural hand soap products. Modern consumers have become more conscious of how they impact the environment and how store$-$bought soaps impact their health and their families. Many of the retail stores that AB works with have expressed a desire to carry organic soap products.

Alexa would like to start a new line of soap products, scented with AB$$s essential oils. In order to do so$,$ AB will need to invest in the following equipment:

$2$ stainless steel liquid soap tank mixers to make the soap products. Each will cost $$80,000.$ Shipping and installation will add another $$3,000$ per mixer.

$$ A stainless steel $550$ gallon storage tank with temperature controls will store excess soap until it is ready to be packaged. The tank will cost $$4,650.$ Installation will require adding a line from the tank to the filler machine, which will cost of $$2,000.$ A rotary volumetric piston filling machine dedicated to fill viscous liquids for personal and home care, at a cost of $$52,700.$ Shipping and installation will add another $$3,000.$ Annual maintenance on this machine is expected to be $$2000$ a year since the filling heads need to be thoroughly cleaned multiple times during the year. Maintenance costs will increase by $10\%$ every year.The mixers, tank and filling machine will all be depreciated using the $7-$year MACRS depreciation schedule. At the end of year $8,$ AB will make a determination as to whether or not to continue this product line. At that time, AB will be able to sell the equipment for $15\%$ of its original price.

AB believes that it will be able to manufacture and sell $500$ cases of hand soap the first year. A case of hand soap will sell for $$360$ in years $1-3.$ The sales price is expected to jump to $$420$ for years $4-8.$ AB expects case sales to increase by $20\%$ the $2$nd year, and $15\%$ every year thereafter until it reaches capacity in year $6.$

AB anticipates using $2$ bottles of essential oils per case of soap. An allowance will need to be made for the fact that these bottles will no longer be sold at the usual $$40$ per bottle.

Since soap products require lye, stabilizers, essential oils, bottles and other packaging, the COGS per case is estimated to be $$85.$ CGS are anticipated to increase by $10\%$ every year.

Labor: the start of a new product line will require $2$ new workers. These workers will be managing the manufacturing and packaging of these products at a starting salary of $$20$ an hour. Their pay is planned to increase by $4\%$ each year

The new product line will require and additional $$20,000$ in Net Working Capital$\mathrm{.}4.$ Based on your analysis, prepare a capital expenditure plan of action for the AB management team. $($Explain which projects you are recommending they fund, in what order, and why$).$ Be sure to respect AB$$s total capital investment limit $($$$3$ million$).$