Payback, Net Present Value, Internal Rate of Return, Effects of Differences in Sales on Project Viability For discount factors use EXHIBIT 14A.1 and EXHIBIT 14A.2. Shaftel Ready Mix is a processor and supplier of concrete, aggregate, and rock products. The company operates in the prairie provinces. Currently, Shaftel has 14 cement-processing plants and a labour force of more than 375 employees. With the exception of cement powder, all materials (e.g., aggregates and sand) are produced internally by the company. The demand for concrete and aggregates has been growing steadily nationally, and on the prairies, the growth rate has been above the national average. Because of this growth, Shaftel has more than tripled its gross revenues over the past 10 years. Of the prairie provinces, Saskatchewan has been experiencing the most growth. Processing plants have been added over the past several years, and the company is considering the addition of yet another plant to be located in Regina. A major advantage of another plant in Saskatchewan is the ability to operate year round, a feature not found in the northern reaches of Alberta or Manitoba. In setting up the new plant, land would have to be purchased and a small building constructed. Equipment and furniture would not need to be purchased; these items would be transferred from a plant that opened in Winnipeg during the building boom period and closed a few years after the end of that boom. However, the equipment needs some repair and modifications before it can be used. It has a book value of $200,000, and the furniture has a book value of $30,000. Neither has any outside market value. Other costs, such as the installation of a silo, well, electrical hookups, and so on, will be incurred. No salvage value is expected. The summary of the initial investment costs by category is as follows: Land Building Equipment: $ 20,000 135,000 Book value 200,000 Modifications 20,000 Furniture (book value) 30,000 Silo 20,000 Well 80,000 Electrical hookups 27,000 General setup 50,000 Total $582,000 Estimates concerning the operation of the Regina plant follow: Life of plant and equipment Expected annual sales (in cubic metres of cement) Selling price (per cubic metre of cement) Variable costs (ner cubic metre of cement). 10 years 35,000 $ 45.00