Operating assumptions Assumptions: Annual growth rate of price of steel Annual growth rate of operating costs Discount rate CF analysis-thin slab CF analysis - Modernize CF analysis - Unmodernized 6.45% 6.75% 35.00% 15.50% 6.84% historical) Thin Slab Minimill Capacity(million of tons of steel) 1 1906 1987 2 1988 3 1989 1990 4 5 " 7 " 10 11 12 1991 1992 1993 1994 1995 1996 1997 1998 Shipments (Exhibit 12A) Hot-rolled sheets (HR) (Exhibit 12A) 0.25 0.5 05 05 05 05 05 0.5 05 05 Cold-rolled sheets (CR) (Exhibit 12A) 0.175 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 Revenue/ton Hot-rolled sheets (HR) Exhibit 128) Cold-rolled sheets (CR) (Exhibit 128) 306.5 390.5 Total revenue (shipment x reviton) Hot-rolled sheets (HR) Cold-rolled sheets (CR) Operating costs/ton Hot-rolled sheets (HR) (Exhibit 128) Cold-rolled sheets (CR) (Exhibit 128) 225 283 Total operating costs (shipment x costton) Hot-rolled sheets (HR) Cold-rolled sheets (CR) Depreciate over 10 years Income Hot-rolled sheets (HR) Cold-rolled sheets (CR) Total income Taxes Add back depreciation Subtract capital expenditures Subtract startup costs Subtract working capital costs Cash flows Internal rate of return (IRR) Discounted cash flows Sum of discounted cash flows (NPV) Nucor's investment criterion: 25% ROA by year 57 Year 5 CF Year 5 Assets: Year 5 ROA 30.00 30.00