Worldwide Paper

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EXECUTIVE SUMMARY
Worldwide Paper Company Longwood Woodyard Proposal

Blue Ridge Mill is considering the addition of a new on-site longwood woodyard in 2006. This proposal is expected to gain two primary benefits during its 6 years economic life: to bring substantial cost saving by eliminating the need to buy shortwood from outside suppliers and produce its own shortwood to sell in open market. After executing detailed and sensitivity analysis, the project is expected to create value for shareholders at Worldwide Paper Company. The valuation method for the project is forecasting the future free cash flows generated from the project and calculating its net present value (NPV). This project has a positive NPV of $936,147, and an
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As a result, Blue Ridge Mill should execute the investment because it has a reasonable high chance to generate value for the company as well as its shareholders.
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