Part 2: Vinatex's Board of Directors is deciding whether they should invest in which new

factory between the two regions below.

The first new yarn factory will be located in the southwestern region. This initiative will put

the company in the right position to become an industry leader in production. The initial

investment of the project is $4,305,000 and the project is expected to have a lifetime of 10

years. The yarn factory requires feasibility study with monthly spending of $191,675 is charged

for agency service and competitor data during the project. The new yarn factory initiative is

projected to bring a fixed revenue of $4,571,500 per year for the first 5 years and from the sixth

year onwards it increases $184,500 per year until the end of the project.

The yarn factory expansion initiative will rely on its existing factory located in northeast region.

This initiative will help the company increase its production capacity and the initial cost of this

project is estimated at $3,946,250 with no further monthly cost. This project is expected to last

for 10 years and generate sales of $1,588,750 per year for the first three years and from the

fourth year onwards it increases $358,750 per year until the end of its lifetime.

The discount rate for both initiatives is 7.2%.

Requirements:

a) Use the appropriate method(s) to evaluate both projects and select your

preferred project.

b) Discuss qualitative factors (non-financial factors) related to your selected

project and explain to your Board of Directors how they will help the

company grow sustainably