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With a smaller volume of nuts required, there would be an opportunity to purchase lower-priced pecans, such as off-colored or Standard pieces. The supply of these lower-priced nuts is smaller and is thus more suitable for a plant of this size. Appendix A, Table A3 shows the internal rate of return (IRR) at base prices for the 750,000-pound capacity facility. The base selling prices for both the oil and flour were specified at $5.40 (Appendix A, Table A3). This is a 10% increase from the base prices for the same products produced by the 2-million-pound facility (Table 13). The base pricing of raw pecan nuts is based on a 5-year average of Standard medium pieces of $3.97 (Table 6). The IRR for the 750,000-pound capacity facility is 7% assuming the base pricing (Appendix A, Table A3).
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