MOTO Corporation Capital Investment MOTO Corporation is an independent automobile manufacturer. The company owns and operates two automobile manufacturing plants in the UK. At the moment, Vehicles produced at these plants have petrol or diesel engines. MOTO Corporation purchases most of its engines from a country in Eastern Asia, which is known to have a long-standing border dispute with one of its neighbours. There has been no interruption in engine supplies from this country over the past ten years, but several analysts have recently expressed concerns that the border dispute between the supplying country and its neighbour is likely to turn into an armed conflict in the near future. As part of its expansion plan, MOTO Corporation is considering constructing a new automobile manufacturing plant. However, there are differing views among the directors on which type of engines this new plant would use in the trucks. Some of the directors believe that the new plant should also use the same petrol or diesel engines as this might allow the company to negotiate a lower price for its engine supplies. Others, however, believe that it is worthwhile to invest in a new manufacturing plant that will produce electric engines to be used in the trucks. You have been asked by the managing director of the company to analyse and produce a report based on the following information:

Option A: Plant that produces petrol or diesel engines-based trucks Option B: Plant that produces electric engines-based trucks Initial investment 28,000,000 44,000,000 Revenue in Year 1 10,700,000 9,400,000 (see additional information) Operating Costs in Year 1 4,800,000 2,400,000 (see additional information) Residual or salvage value 7,600,000 5,000,000 Expected life 8 years 8 years