Skyview Co. (AC) is a Canadian kayak manufacturer that has up to $325,000 to invest in either a new plant in Portland, Oregon, or Burnaby, British Columbia. The following information has been gathered on the two project alternatives: All funds are CDN $.

	Burnaby	Oregon
Cost of building and equipment investment needed now	$325,000	$225,000
The working capital investment is needed now (released in year 5)	$0	$60,000
Annual net operating cash inflows for 5 years	$85,000	$65,000
Salvage value of equipment in year 5	$35,000	$0
Maintenance of equipment required in year 3	$5,500	$6,000

Additional information:

- The equipment has a 5-year life.

-The Oregon project would be the company’s first manufacturing plant in the United States. 40% of Skyview’s distributors are located in California and Oregon. Skyview expects that due to similarities in Westcoast culture there should not be any significant challenges with the new plant; although Mark Peterson, head of Human Resources, has suggested planning would be necessary for the large Spanish-speaking workforce.

- The Burnaby project is located within 25 kilometers of the company’s head office. Due to the pandemic, there has been a large increase in outdoor activities including kayaking and the company expects to see continued growth. There have been some rumblings in the current workforce of unionization, but nothing formal has occurred.

- Both projects will be implemented with a five-year plan – at which time the company will reassess the viability. Any working capital investment will be released in year 5 and invested elsewhere. Skyview’s discount rate is 10%.

REQUIREMENTS: (do not leave Connect blank, input your final NPV for 1 and 2)

3. Provide a qualitative analysis of Skyview’s decision between the Burnaby and Oregon projects. Make sure to list the pros and cons of each project and conclude which venture is better, from a qualitative perspective. (a minimum of 2 pros and 2 cons per project).

4. Based on both your quantitative and qualitative analysis, which project location do you recommend and why? (not a one-word answer, imagine you are speaking to the owner!)