Case #22 Victoria Chemicals Synopsis and Objectives go/no-go decision 1. The identification of relevant cash flows; in particular‚ the treatment of: a. sunk costs b. cash flows obtained by cannibalizing another activity within the firm c. exploitation of excess transportation capacity d. corporate overhead allocations e. cash flows of unrelated projects f. inflation. 2. The critical assessment of a capital-investment evaluation system
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number okay here 4 Calc initial invest 8 8 PI 0.902 4 Calc annual OCF 8 8 IRR 14.12% 4 Calc terminal year 8 8 MIRR 16.10% 4 Net Project CF 8 8 NPV ($2‚295‚332.62) 4 Cum CF 2 2 Results area 20 20 Question 1 6 6 Questions Question 2 6 6 1) Using your spreadsheet model‚ indicate how much change in NPV occurs with a +1% increase in the discount rate. Question 3 4 4 Question 4 2 2 Question 5 12 12 NPV (at 19%) -2295333 —> note: type number here‚
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Variable cost per unit can be increased by 10% up to 30% and the impact on cash flows and Net Present Value and IRR can be analyzed. 4. How should the interest expenses be treated? Explain. The interest expense should not be deducted when calculating the annual cash flows. Interest is a financing expense and is included in the discount rate (cost of capital) used to calculate the NPV. If we deduct interest expenses we will be double counting. 5. Using the base case estimates calculate the
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order are: 1) NPV 2) MIRR 3) IRR 4) Profitability Index. For the purpose of this case‚ I have used those top four in addition to: 5)Payback period and 6) Discounted Payback Period. For the purpose of this case‚ the CFO has asked that the “four best” projects be ranked and recommended as to which the company should accept. These top four rankings are reflected with each of the six (6) quantitative ranking calculations below; however‚ if asked to select just one of the rankings‚ then NPV would be selected
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strategy consideration. For the four investment criteria‚ here’s the elaboration. NPV. Since the two plants are of identical scale‚ age‚ design and similar project size‚ it makes sense to use NPV to compare the two projects. Not taken into account the erosion at Merseyside‚ the projected NPV of Rotterdam project is GBP4.49 million (GBP15.06 million- GBP10.57 million) higher than that of Merseyside project. IRR. The IRR of the Merseyside project (24.3%) is 5 percentage points higher than that of Rotterdam
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new boat costs. Make your own assumptions and recalculate. 2. Why do NPV and EAC rankings differ? Which ranking do you prefer? Why? 3. This spreadsheet was designed to accommodate only this case. What changes might you make to generalize the template to handle a wide variety of competing (mutually exclusive) projects in which you had to compare NPV and EAC results? Would you add other ranking criteria‚ such as IRR and PI? New Economy Transport – case assignment The case
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in the WACC into our projections we found that if the demand maintains at an average rate the project will be at a positive Net Present Value of $5‚997‚505.31 with an IRR of 13.21%‚ a profitability index of 8.84‚ and an approximate payback period of 6.84 years. Please see Exhibits below for a snapshot of the capital budget and NPV values. This information seemed to be very promising for the project in general. However‚ our continued analysis showed the project to be very sensitive to the sales
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REPORT ON WEARABLE TECHNOLOGY Technological Innovation Research Topic Manpreet Kaur Student ID: U1059388 Subject Code: CIS8000 4/23/2014 April 23‚ 2014 Automated Clocking Of Employee Attendance EXECUTIVE SUMMARY – 255 WORDS Every organisation has a need to reliably track attendance to ensure orderliness and control. Having accurate and easy to access attendance data provides greater insight into employee productivity and reduces the time involved in payroll processing and crediting. Automating
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growth to the company. Nigel’s initial investment is under the boards limit capital spending investment of $80M‚ the projected return on investment is projected to be $134M yielding IRR of 28.7%. This is a substantial revenue gain for the company and would restore confidence in shareholders. Question 2: In analyzing the NPV projects proposed by each board member‚ it would be most prudent for Pan Europa to invest in Nigel Humbolt plan to acquire leading Schnapps brand and associated facilities. The acquisition
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for E-business Projects Mark Jeffery‚ Northwestern University Introduction The Information Paradox Review of Basic Finance The Time Value of Money ROI‚ Internal Rate of Return (IRR)‚ and Payback Period Calculating ROI for an E-business Project Base Case Incorporating the E-business Project Incremental Cash Flows and IRR Uncertainty‚ Risk‚ and ROI Uncertainty Sensitivity Analysis 1 2 4 4 6 6 7 8 10 11 11 11 Project and Technology Risks Monte Carlo Analysis Applied to ROI Executive Insights The Important
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