Which project should James Fawn propose to the chief executive officer and the board of directors?

Based on the financial and non-financial analysis, it is recommended that James Fawn proposes the Merseyside project to the chief executive officer and the board of directors. While the Rotterdam project has a higher expected net present value and internal rate of return, the Merseyside project has several advantages that make it a more attractive investment.

First, the Merseyside project has a lower initial investment cost and a shorter payback period, which reduces the project’s financial risk and increases its potential profitability. Second, the Merseyside project has a lower risk profile, given its reliance on an existing plant and technology, which makes it more attractive to risk-averse investors. Third, the Merseyside project offers more managerial flexibility, which increases its potential profitability and reduces its risk of cost overruns or delays.

While the Rotterdam project has potential benefits, such as lower transportation costs and higher production capacity, these benefits may not outweigh its higher financial risk and lower managerial flexibility. Additionally, the Merseyside project aligns more closely with Diamond Chemicals’ strategic goals of increasing production efficiency and reducing costs, which makes it a better fit for the company’s overall strategy.

In conclusion, Diamond Chemicals should invest in the Merseyside project, taking advantage of its low-risk profile, potential profitability, and managerial flexibility. James Fawn should present a detailed analysis of the project’s financial and non-financial aspects, highlighting its advantages over the Rotterdam project and addressing any concerns or objections from the executives and the board of directors. Fawn should also emphasize the project’s alignment with Diamond Chemicals’ strategic goals and its potential to improve the company’s competitive position in the market.

Overall, the decision to invest in a project involves various factors, including financial metrics, risk analysis, managerial flexibility, strategic fit, and stakeholder considerations. By carefully evaluating and comparing the Merseyside and Rotterdam projects, Diamond Chemicals can make an informed decision that maximizes the value of its investment and supports its long-term success.