Euroland Foods Company sold 60 old trucks to buy 50 new refrigerated tractor-trailer trucks in 2001 and 50 new refrigerated tractor-trailer trucks in 2002. Heinz Klink could get EUR 4.05 million to sell 60 old trucks after two years. The new trucks had larger capacity than old trucks and had an increase 15% of cubic meters of goods hauled. These new tractors would be more fuel efficient and maintenance efficient. More new trucks would allow more flexible scheduling and more efficient routing and would shorten delivery times. More trucks were good for geographical expansion over the long term. .
Euroland Foods Company had EUR30 million total net investments in trucks and EUR3 million in working capital to yield total costing saving and increased EUR11.6 million in sales potential over next seven years according to the Exhibit 3. The internal rate of return (IRR) was 7.8%. The minimum accepted return on revenue (ROR) was 8%. Equivalent annuity was negative EUR0.04 million. IRR minus minimum ROR was -0.2%. Profitability index was 0.99. The payback was six years. Net present value (NPV) at minimum ROR was negative EUR0.19 million. .
Project 2. A new plant. Maarten Leyden noted the market demand of yogurt and ice cream of Euroland Foods in the southeastern area reached a maximum capacity of Melun, France, manufacturing and packing plant. The delivery costs were high when distance was high. Euroland Foods lost some sales because of weak capacity of shipping. Maarten Leyden planned to build a new manufacturing and packaging plant in Dijon, France, only at the southern edge of the Euroland Foods marketing area. .
Euroland Foods would spent EUR37.5 million for plant expansion and would require EUR7.5 million for working capital according to Exhibit 3. The firm would pay EUR21 million for equipment over seven years and for plant over ten years. Sales increased and shipping costs decreased. Euroland Foods Company expected to yield totaling EUR35.