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II. ISSUE IDENTIFICATION (Specific)
In order to meet the projected global demand for chemical AR-42, should Axeon N.V. pursue constructing the new manufacturing plant in the U.K. or should it manufacture the product in its existing Dutch plant?

III. ANALYSIS FRAMEWORK
1. Qualitative Analysis
The group started the analysis by evaluating the reasonableness of assumptions used by Wallingford in making his computations. Assumptions that the group believes may not be valid will then be modified to be more realistic. Furthermore, the internal repercussions (how it would impact relationships within the organization) of a particular decision will also be evaluated. Ultimately, the decision with the best NPV and the most manageable negative repercussions will be selected.
2. Quantitative Analysis
Revised assumptions will be applied in calculating NPVs under various scenarios. A sensitivity analysis that relaxes these assumptions will also be made to augment the primary NPV analysis.

IV. ANALYSIS
A. Evaluation of Assumptions
Several assumptions were relied on in projecting the effects of the proposal which may not be appropriate. Among these assumptions are the following:
1. The 8% discount rate used to compute for the net present value of the proposal is the rate at which they could borrow money in England to fund the project. Using the 8% discount rate overestimates the NPV of the proposal making it appear more profitable than it really is. The proposal should have used the 12% required rate of return set in the company’s policy to see if it could meet the company’s expected investment yield from any proposal.
2. It was also assumed that the UK branch would be able to capture half the total market (400 tons) for AR-42 starting its third year of producing it. In fact, this assumption was one of the primary factors that lead to the disagreement of the Dutch

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