Q.6 Given all the optional scenarios, what recommendations would you make to Tucker regarding the expansion? Show the impact of adopting your recommendations in calculations on the sheet. You may combine any of the previous changes into this recommendation, but must include some response to the labor dispute. The NPV and IRR should reflect all implemented options. The recommendation should be thoroughly explained in at least a full paragraph and state clearly your recommendation for what Hansson should do.

Units 48000 52000 56000 60000 64000 68000 68000 68000 68000 68000 Unit Costs 0.94 0.95 0.96 0.97 0.98 0.99 1.01 1.02 1.03 Selling Price 1.77 1.81 1.84 1.88 1.92 1.95 1.99 2.03 2.07 2.12 New Project 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Exhibit 5 Exhibit 5 Revenue $ 84,960.00 $ 94,120.00 $ 103,040.00 $ 112,800.00 $ 122,880.00 $ 132,600.00 $ 135,320.00 $ 138,040.00 $ 140,760.00 $ 144,160.00 Cost to Expand 57,817.0 Production Expenses Interest Exp 7.75% 1% Raw Materials $ 45,120.00 $ 49,400.00 $ 53,760.00 $ 58,200.00 $ 62,720.00 $ 67,320.00 $ 68,000.00 $ 68,680.00 $ $ 69,360.00 $ 70,040.00 3.00% Manufacturing Overhead 3,600.00 $ 3,708.00 $ 3,819.24 $ 3,933.82 $ 4,051.83 $ 4,173.39 $ 4,298.59 $ 4,427.55 $ 4,560.37 $ 4,697.18 Depreciation 4,000 3% Maintenance Expense 2,250.00 S 2,317.50 2,387.03 2,458.64 S 2,532.39 2,608.37 S 2,686.62 $ 2,767.22 S 2,850.23 S 2,935.74 Tax Rate 40% Exhibit 5 Labor Expense $ 18,640.00 $ 20,233.30 $ 22,842.40 $ 25,254.60 $ 28,174.80 $ 30,888.50 $ 31,969.60 $ 33,088.50 $ 34,246.60 $ 35,445.20 7.80% Selling General and Admin $ 6,626.88 $ 7,341.36 $ 8,037.12 $ 8,798.40 $ 9,584.64 $ 10,342.80 $ 10,554.96 $ 10,767.12 $ 10,979.28 $ 11,244.48 NPV Discount 7.75% Total Operating Expense $ 76,236.88 $ 83,000.16 $ 90,845.79 $ 98,645.45 $ 107,063.67 $ 115,333.05 $ 117,509.77 7 $ 119,730.38 $ 121,996.48 $ 124,362.60 EBITDA $ 8,723.12 $ 11,119.84 $ 12,194.22 $ 14,154.55 $ 15,816.33 $ 17,266.95 $ 17,810.23 $ 18,309.62 $ 18,763.52 $ 19,797.40 Flat Depreciation $ 4,000.00 $ 4,000.00 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 EBIT 4,723.12 $ 7,119.84 $ 8,194.22 $ 10,154.55 $ 11,816.33 $ 13,266.95 $ 13,810.23 $ 14,309.62 $ 14,763.52 $ 15,797.40 Flat Interest Expense $ 4,480.82 $ 4,480.82 $ 4,480.82 $ $ 4,480.82 $ 4,480.82 4,480.82 $ 4,480.82 $ 4,480.82 4,480.82 $ 4,480.82 EBT S 242.30 $ 2,639.02 $ 3,713.40 $ 5,673.73 $ 7,335.51 $ 8,786.13 $ 9,329.41 $ $ 9,828.80 $ 10,282.70 $ 11,316.58 Calc Taxes $ 96.92 $ 1,055.61 $ 1,485.36 $ 2,269.49 $ 2,934.21 $ 3,514.45 $ 3,731.77 $ 3,931.52 $ 4,113.08 $ 4,526.63 Net Profit S 145.38 $ 1,583.41 $ 2,228.04 $ 3,404.24 $ 4,401.31 $ 5,271.68 $ 5,597.65 $ 5,897.28 $ 6,169.62 $ 6,789.95 Flat Add Depreciation $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 $ 4,000.00 Total Cash FI -57,817.0 $ 4,145.38 $ 5,583.41 6,228.04 $ 7,404.24 $ 8,401.31 $ 9,271.68 $ 9,597.65 9,897.28 $ 10,169.62 $ 10,789.95 NPV IRR C