Case 1 Corporate Finance: Capital Budgeting and Resource Allocation Victoria Chemicals plc: (A) The Merseyside Project and (Case 22), (B) Merseyside and Rotterdam Projects (Case 23) - Bruner, 6th ed.
The two cases shall be written as one project
Each group should hand in a final report plus be prepared to present their results at a seminar.
The report should contain problems, methods, and relevant references well formulated and discussed, together with a thorough analysis. (Note: methods is a description how you solved the issues, and not a description of different valuation methods)
Try to keep the reports short and concise. Please note, that references, properly used, in the text are included in the reference list. Include the Excel sheet with your calculations in the text or in Appendix. 10 pages maximum (excluding Appendix).
At each seminar approximately 5 groups will attend. Each group must be prepared to present all parts of their reports. The responsible teacher for the seminar has the possibility to assign a specific topic for each group to present. Check the group list to see how many teams there are to share the total time of each seminar.
Grading: Maximum point equals 5. The seminar is mandatory and a person not present will have a reduction of 25% of the received points.
The case must be handed in at 14.00 the day before the presentation. Hand it in to Hans Jeppsson’s mailbox (D6) or in the mailbox outside the glass door (D6).
Below are some issues, and reminders, to think about when you solve the case: Case 22 - Victoria Chemicals plc: (A) The Merseyside Project
Identification of relevant cash flows; in particular, the treatment of: sunk costs; cash flows obtained by cannibalizing another activity within the firm; exploitation of excess transportation capacity; corporate overhead allocation; cash flows of unrelated projects; and inflation.
The critical assessment of a capital investment...
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