Financial Considerations

Financial aspects of new proposals at AB1 were considered from a number of perspectives, in part because of the interdependent nature of many proposals. The results of not investing in a proposal are normally compared with the results of investing and the differences noted. Variations on the investment assumptions are also tested, including errors in the forecast sales volumes, learning rates, productivities, selling prices, and cancellations of both current and future orders for existing and potential business.

For the Stanhope proposal, the site investment required is $3,012,000. The details of this investment are shown in Table 2. The total investment required amounts to $7,108,000 (plus required working capital of $1,380,000). The equipment is depreciated over an eight year life. AB1, under the revised tax laws, is in the 34 percent tax bracket. The price of the piston heads has been tentatively set at $25.45 apiece. ABl's expected costs are shown in Table 3.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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