The Silver West Mining (SWM) is a small size company that has total assets of $45 million, of which $4 million is cash. The company has appointed its vice president of business development, Larry Wilson, to look into a proposal for a project that could create value to the company. The pilot testing has revealed that carrying out such project could yield 340,000 kg per year of a chemical element KX over a 7-year period, as well as 68 kg of a very valuable nature compound each year that worth $7,275 per kg. SWM has the capacity to borrow up to $9 million at 8% interest rate. The projected operating cost would be $900,000 each year (with fixed cost at $400,000 and variable cost at $500,000). The uncertainty of the project would be the initial cost and the market-selling price of the chemical element KX. The capital investment for the project could cost $10 million with possible cost overruns of 10% or 15%. For tax purpose, assume that the capital investment could be depreciated using straight-line method over the 7-year period, and the tax rate is 35%. Meanwhile, there is an alternative way of implementing the project with a possible capital investment that would be reduced by $1.7 million. However, using this approach, the fixed cost of the projected operating cost would increase to $850,000 per year, result in higher overall operating cost per year. Regardless of how to carry out the project, a new government regulation for the project of such nature, if passed, would increase the capital investment by another $1.5 million. The current price of the chemical element KX is $10,000 (per 1,000 kg) but the future price is anyones guess. The optimistic estimation is $14,000 (per 1,000 kg) while the pessimistic estimation is only about $7,500 (per 1,000 kg). Larry does not have a strong feeling about the price in either one. His best estimation is that the price will just increase with the inflation, which is about 3.5% per year, and the operating costs would increase with the inflation as well. In the market, similar project such as this requires a minimum nominal rate of return of 14%. Larry needs to evaluate this project using NPV analysis, starting with the base-case scenario and running sensitivity and break-even analysis under different scenarios as appropriate. What scenarios or forecast would get Larry worry the most? Where would extra information be most helpful? Is there a case here for delaying the project? Decisions and Decisions?