Issue #1: New facility for FSL For acquiring the new facility, the consulting group wanted to evaluate both options of leasing the facility as well as an outright purchase. They gathered data which is presented in Appendix 1. Appendix One (Construct or lease) Objective: Should FSL lease or construct their own production facility Option 1: Construct Costs to incur: Buying land, construct building and getting ready for use $ 900,000 Taxes, insurance, and repairs (per year) $ 50,000 Intended years of use 11 Projected market value in 15 years $ 2,300,000 Maximum down payment FSL can make $ 1,800,000 Remainder in four payments of $ 230,000 Option 2: Lease Intended years of use 11 First lease payment due now $ 82,000 Rest of the lease payments (years 2-15) $ 115,000 Operating costs to be paid by FSL Property taxes (annual) $ 14,000 Insurance (annual) $ 24,000 Initial one-time deposit, will be returned in year 15 $ 75,000 One time restoration expense to take place in Year 10 $ 27,000 Required rate of return 10% Methodology: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing)

Appendix One (Construct or lease) Objective: Should FSL lease or construct their own production Methodologv: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing). Appendix One (Construct or lease) Objective: Should FSL lease or construct their own production Methodologv: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing)