These two cases discuss project evaluation of a diversification proposal in a single product context. Case A (F&A0402), in particular, deals with strategic issues such as strengths and vulnerabilities of current business (precision tubes), need for diversification, evaluation of a diversification project (industrial gas cylinder) in terms of strategic fit and risks, and detailed financial evaluation.Case B attempts to factor into the evaluation process issues such as tax benefits, foreign exchange fluctuations, backward area concessions, etc. The financial evaluation is developed in LOTUS 1-2-3 to facilitate sensitivity analysis.