In this team-based assignment, you have been brought in to assess whether Nucor should be the first adopter of a new technology. This requires a $340 million investment in a commercially unproven technology. If successful, Nucor can expand into the flat sheet segment that was previously a segment where only the large integrated steelmakers competed. This assignment requires that you combine qualitative information (e.g., industry and firm insights) with quantitative analysis in Excel (discounted cash flow analysis). I recommend that you assign team leads to each part. The final response requires that you weigh the various pieces of evidence together as a team and conclude with a final recommendation. The Excel cash flow parts contain three worksheets (Nucor thin slab analysis, projected integrated steelmaker modernize, and projected integrated steelmaker unmodernized spreadsheets). You are being asked to apply five complimentary types of analysis to the Nucor case: background analysis (brief industry and internal), cash flow analysis (a template is provided), scenario analysis (i.e., changes within the model), competitive analysis, and real option analysis (i.e., considerations outside the model). Your deliverable should be a memo of up to three single-spaced pages (plus attachments, such as the Excel sheet you used for the analysis). This memo should have five sections based on the numbered instructions below. Be sure to use subheadings, underlining, boldface or similar formatting to communicate your analysis and recommendations clearly and efficiently. NOTE: To encourage a fair distribution of work output, it is important that you specify who the team leads are for the various parts.

In this assignment, you will advise Ken Iverson, Nucor CEO, on whether to adopt SMS's CSP process. In your memo to him, please address the following issues.

4. Real options analysis

Consider the following strategic (real) options situations:

• Is there benefit to waiting 1-2 years?
• Is there benefit to starting the project but then later abandoning the project? In other words, how much of the $340 million investment is redeployable for other uses if we decide to later stop the project?
• How should we think about possible growth options (i.e., consideration of plants beyond the first one)? Keep in mind that Ken would ultimately like to build 3-4 plants.