American Chemical Corporation Analysis

Harris Seafood Question Number One (1) Value the processing plant proposal. Ignore the Industrial Revenue Bond financing. Assume: Market Risk Premium 8.8%, Riskless Rate 11.41%, and Harris Long Term Debt Rate 13.5%. Our approach to valuing the processing plant can easily be decomposed into three distinct steps first, find the

The company owns two plants in Europe, one being Merseyside Works, England and Rotterdam Facility, Holland. Both plants were built in 1967 and are identical in scale and design. James Fawn, the Vice President and Manager of Intermediate Chemicals Group, is in charge of both plants.

Question 3: One of the assumptions of the management is that they assume no acquisitions will be made in 2007. If the management decides to acquire other companies in 2007 and if they decided not to repurchase stocks, they will be able to use the 230M cash or borrow debt to finance the acquisition. And this would have little impact on financial stability. If they decided to repurchase stocks, they won’t be able to finance the acquisition with cash account, and the only way left is by borrowing more debt. And this probably have minor to major impact on financial stability depending how much the company decide to borrow.

1. What are the annual cash outlays associated with the bond issue? The common stock issue/ The bond principal repayment will be $6.25 million annually. The cash dividends will be $7.5 million annually on additional stock. 2. How do you respond to each director’s assessment of the financing decision? The following assessments

3 The net present value (NPV) of each option has been calculated and included in Table 1, based on figures from the study group report. Unfortunately, these figures are flawed in the same manner as Wriston’s current performance and accounting mechanisms in that they don’t properly allocate revenue, nor do they recognize inherent manufacturing complexities. The plant closure option’s expected operational gain seems particularly suspect. A better valuation of the new plant options is perhaps

to me, Sean 1 hour agoDetails IOE 201 Economic Decision Making Term Project Case Study: Olive Hill Farm Instructor: Debra Levantrosser Team members: Justin Rogers Jack Zohoury Sean Jager Date: Febrauary 23, 2016 University of Michigan Industrial and Operations Engineering Abstract Grappling with the potential purchase of Olive Hill Farm, we decided to conduct a financial analysis to determine whether the project should be taken or not. Our financial analysis include scenarios for the best, worse, and most likely outcomes of purchasing the farm. For each scenario a Net Present Worth (NPW) and an Internal Rate of Return (IRR) was calculated and compared. This revealed that there was little gain for the worst case scenario and large gains for the other two scenarios. A sensitivity analysis and a break-even analysis was also conducted. The sensitivity analysis identified the most influential factors on the NPW. In the end, the analysis favored buying Olive Hill Farm because it would be a low risk, high reward investment.

The main problem is with Woodson Chemical Company is the lack of management and communication across all divisions within the organization creating bottlenecks

The Recalcitrant Director at Byte, Inc.: Corporate Legality Versus Corporate Responsibility I. ABSTRACT Mr. James Elliott, CEO and Chairman of Byte Products, Inc., presents his recommendation to the Board of Directors to purchase an existing plant in Plainville as a temporary plant until the new one is online in 3 years. All on the Board except one (10–1) seem to favor the proposal. What ensues is the discussion between Elliott and Kevin Williams, board member, over the proposal to purchase a plant with the intention of closing it in 3 years.

Production Line Staff Production line workers are the employees who are usually doing their work by hand or in this day and age, running the machine or equipment to make the products. In this particular case, Canada Chemicals Corporation utilizes their production employees by producing industrial chemicals. These

Based upon the firm’s low target leverage of 5%, low degree of operating leverage, and favorable credit history and financial outlook, the model assumes a cost of debt in line with AAA corporate debt at 7.02%. This estimate seems reasonable and sensitivity analysis shows a 1% decrease in the forecasted share price requires at least a 2.4% increase in the cost of debt.

Tyler Kerth Management 521 Report #1 1. Do you feel that the Bearington plant has the right equipment and technology to do the job? Why?

0.94. Using the capital asset pricing model, the cost of equity comes to 9.65%. Rf Beta (Project) MRP Cost of Equity 3.10% 0.94 7% K (e) = K (rf) + beta (project) * MRP K(e) = 9.65% Capital Structure The firm has decided to increase the debt finance component portion from 20% to 30% which is a good decision since the interest payments are 100% tax deductible. The appropriate capital structure would be to

The upgrade of the Rotterdam plant involves implementing the Japanese technology and requires a capital expenditure of £8.0 million with £3.5 million spent today, £2.0 million on year one, £1.0 million on year two and £1.0 million on year three. This will also increase polypropylene output by 7% from current levels at a rate of 2.0% per year. In addition, gross margin will improve by 0.8% per year from 11.5% to 16.0%. After auditing the financial models, it is concluded that the static net present value of the upgrade is -£6.35 million using a discount rate of 10% and an expected inflation rate of 3% annually. The Rotterdam upgrade contains an option to switch to the speculated German technology being available in five years. The current value of the option is zero as it is deeply out-of-the-money. The total net present value of the upgrade is -£6.35 million. The incremental earnings per share of the upgrade is £ 0.0013, the payback period is 14.13 years, and the internal rate of return is 18.7%.

Problem Analysis Our analysis attempts to answer the question, “What are the things a company must consider when analyzing a new investment or project?” According to the text, a firm’s first objective when deciding to take on new debt should be that its return on net assets (RONA) should be greater than its weighted average cost of capital (WACC). Since we are working with an income statement only and do not have an amount for net assets, we will instead use return on invested capital (ROIC), which measures how well a company is using its money to generate returns. Comparing a company 's return on capital (ROIC) with its cost of capital (WACC) reveals whether invested capital was used effectively. From our spreadsheet calculations we see that using our estimated operating profit provides us with a 19.9% return on invested capital with only a 7.2% weighted average cost for that same capital. If these numbers are even close to correct, George should definitely make the move.

2. Is the price of $319 million reasonable for the Monticello Mill and Box Plants based on a cash-flow analysis? Assume cash flows consistent with Table A, Table B and Exhibit 3, a discount rate of 13%, and a terminal value equal to the book value of assets in1993.