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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Victoria Chemicals: The Merseyside Project Executive Summary Victoria Chemicals is facing pressures from investors to improve its financial performances. The plant manager is currently considering whether to accept a GBP 12million initial outlay project to renovate its polypropylene production line at Merseyside plant. The benefit of the plant is the lower energy requirement of production and a greater manufacturing capacity. This report consist a recommendation for the plant manager which consists
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Group Paper Analysis‚ Team 4 4/22/2010 Victoria Chemicals (B) Group Case Study Introduction Victoria Chemicals’ Intermediate Chemicals Group (ICG) is evaluating two mutually exclusive proposals on their capital expenditures. The Liverpool and Rotterdam plants have compiled separate proposals. Each proposal had the potential to increase the polypropylene output by 7 percent for their plant respectively. Victoria Chemicals could not view a 14 percent increase companywide being feasible‚
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CASE 1 - A CASE STUDY OF VICTORIA CHEMICALS Corporate Finance (FEG304) Table of Contents 1.0) Introduction This report contains two case studies in the discourse of Corporate Finance‚ more specifically capital investment strategy. The cases are applied on the fictional company Victoria Chemicals and are divided into (A): “The Merseyside Project and Victoria Chemicals” and (B): “The Merseyside and Rotterdam project”. The cases are picked from the book “Case Studies
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pleased to share my concerns‚ analysis and recommendation about the Merseyside Project with you. Your DCF analysis is excellent and helpful. However‚ I have to make some changes to it. The memo will be divided into 6 parts. Suggestions for Merseyside project: P1 What should change in the DCF analysis and why: P1-P3 Other important issues: P3-P4 Evaluation of each investment Criteria: P4-P5 Ultimate recommendation and forward looking: P5-P6 Revised DCF analysis: Appendix Changes to
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Case Study Week 3 - Victoria Chemicals PLC 1. What changes‚ if any‚ should the plant manager (Morris) ask the financial controller (Greystock) to make to his analysis? Morris should ask the Financial Controller to the make the following changes to his analysis: • Include the cost of the rolling stock. These would become an essential asset of the Merseyside Works. The investment to occur in 2010 and then depreciated over the following 10 years. These would become an asset of the Merseyside works
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Studies Report: Victoria Chemicals This report will be covering the several capitals investment aspects in which are associated with the case – Victoria Chemicals PLC (A): The Merseyside Project‚ written by Robert. F. Bruner. Introduction In the case‚ Victoria Chemicals‚ a fictional company‚ were under the pressure of its investors to improve its performance as the earnings per shares (EPS) has decreased from 250 pence in 2006 to 180 pence in 2007. Victoria Chemicals is a producer of polypropylene
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* * Yogi’s Minimum * Case 08-4 * * Background * * A public utility company‚ Big Bear Power‚ has signed a 10-year non-cancelable lease from Goliath Company for a combustion turbine. The lease agreement is signed on December 15‚ 2004 and Big Bear has the right to use the turbine as of January 1‚ 2005. * Annual lease payments are $1 million per year‚ payable ratably over 12 months at the beginning of each month‚ according to the lease agreement. The minimum rent
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Introduction The following report shows that the proposal of the modernisation project should obtain funding from the corporate headquarters of Victoria Chemicals. The project has an initial outlay of GBP12 million to renovate and rationalise the polypropylene production line at Merseyside plant. This is done in order to make up for deferred maintenance and exploit opportunities to achieve increased efficiency. This report will look at the following four main areas of concern in order
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Case 22: Victoria Chemicals The Merseyside Project Table of Contents Executive Summary 3 Problem Statement 3 Key Decision Criteria 4-5 Data Analysis 5-6 Alternatives Analysis 6-7 Recommendations 8 Action and Implementation Plan 8-9 Exhibits 10 References 11 Executive Summary Victoria Chemicals is a major competitor in the worldwide chemicals industry. They are a leading producer of polypropylene‚ which is a polymer used in products such as: medical products and carpet fibers.
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