There are no changes needed for the discounted cash flow analysis because the analysis cover all

the information needed. The Transportation Davison cost should not be included because they are using their excess capacity. In addition, Morris should tell the Director of Sales that since the market is in downturn right now, and the Rotterdam facility has excess capacity, it would be a good time to close down the Merseyside facility in order to implement the project and rely only on Rotterdam until the project is completed. Even though the new product may cannibalize the old one, but it would generate more income since it is more efficient. The EPC project should not be included because it has a negative NPV. For the analyst from the Treasury staff, Morris should tell him that we dont use the real rate of return because our cash flows would not be adjusted for inflation. Therefore, the nominal rate must be used. The Merseyside project is very attractive because it would increase the firms efficiency. In addition, it meets all the companys criteria with an average annual addition to EPS of GBP0.022, payback period of 3.8 years, NPV of GBP 10.5 million, and an IRR of 24%. Therefore, this project should be funded and implemented.