This website uses cookies to ensure you have the best experience. Learn more

Victoria Chemicals Case Study 1 Victoria Chemicals (A) Mba9005 Ashley James

1935 words - 8 pages

Project Risk and Cost Management
Case Study
Diamond Chemicals PLC (A): The Merseyside Project

Group Members: Divya Yadav, Lamia Nafees, Ashwin Chadaga, Deeshanu Sharma

Executive Summary
This summary report provides an analysis and estimation of capital budgeting proposed that is being proposed to the Senior Management in Diamond Chemicals. The goal of this project was to save energy, improve process flow and product outputs of the Diamond Chemical Merseyside factory.
Diamonds Chemicals, a major competitor in the worldwide chemical industry and a leader in the producer of polypropylene. Lucy Morris, the plant manager estimated £9 million ...view middle of the document...

The tax rate required in capital-expenditure analyses was 30 percent. Greystock exposed that any plant facilities to be replaced had been completely depreciated. He included in the first year of his forecast “preliminary engineering costs” of £500,000, which had been spent over the preceding nine months on efficiency and design studies of the renovation. Moreover, the corporate overhead allocation is at the rate of 3.5%. Greystock had decided to modify the DCF and suggested that the capital program requires 10% hurdle return rate for the project.
There were some concerns imposed by the transport division, ICG sales and marketing department, assistant plant manager and the treasury staff at Diamond Chemicals to carry out this project. Firstly, the transport division responses were that the company will be needing more propylene gas to be transported, without this the raw material cannot be completed. For this consideration, the transportation division will have to increase its allocation of cars to Merseyside and the controller at Diamond Chemicals has refused to add this cost into the project. Secondly, the ICG department were concerned about the market polypropylene which is very competitive. They assumed that the industry is in a downturn and it looks like an oversupply is in the works. The VP of marketing is skeptical about the sales figures due to the ongoing downturn. He said that with lower costs at Merseyside, Diamond Chemicals might be able to take business from the plants of competitors such as Saône-Poulet or Vaysol. Thirdly, Griffin Tewitt, the assistant plant manager had proposed a renovation of the EPC production line for a cost of £1 million. It is understood that renovation would give Diamond the lowest EPC cost base in the world and improve cash flows by £25,000. And lastly, the treasury analyst says that the discount rate used is improper and the target rate of return for Diamond Chemical should be 7 percent.
To sum up, Morris reviewed Greystock’s analysis and settled the questions surrounding the tank cars and potential loss of business volume at Rotterdam. Merseyside project met the four criteria, average annual addition to EPS = £0.018, payback period =3.6 years, net present value = £9.0 million, internal rate of return = 25.9 percent. Based on our study, we recommend to undertake the project due to several reasons such as it meets all investment criteria and adds significance to shareholder and the NPV is less than 0.
Recommendations
The results based on the case study demonstrates a better NPV, IRR, payback period and annual EPS. We recommend to proceed with the project as it will be beneficial for Diamond Chemicals. Here are some proposals for Diamond Chemicals to consider;
• Take into account the cannibalization charge
• Take into account the 3% inflation rate in the project
• Disregard the £500,000, engineering sunk cost from the study

Statement of the Problem
To determine if the proposed project by the...

Other assignments on Victoria Chemicals Case Study 1 Victoria Chemicals (A) Mba9005 Ashley James

A Case Study-Jane

511 words - 3 pages A Case Study-Jane A Case Study-Jane The description of the story was that Jane was constantly beaten from her father as a child. She was very confused as there was no explanation as to why he was beating on her. She was beat on by her husband 3 years into their marriage. The explanation of Jane’s beatings from her father was that she was being “naughty”. As for her husband he beat her for “challenging him”. This wasn't an acceptable

How To Write A Case Study

470 words - 2 pages Here's How: 1. Investigate and Analyze the Company’s History and Growth. A company’s past can greatly affect the present and future state of the organization. To begin your case study analysis, investigate the company’s founding, critical incidents, structure, and growth. 2. Identify Strengths and Weaknesses Within the Company. Using the information you gathered in step one, continue your case study analysis by examining and making a

A Social Worker Case Study Summary

355 words - 2 pages A Social Worker Case Study Phoenix A Social Worker Case Study The social worker in the case study displays characteristics of an effective helper. An effective helper has accurate empathy for her clients (O'Hagan, 2007). The helping relationship begins with the development of trust and empathy. The worker seems to understand the clients’ pain. Compassion and understanding assist the

Consensual Relationship Agreements: A Case Study

2144 words - 9 pages Consensual Relationship Agreements: A Case Study Zachary -- Dr. Kimberly A Carter BUS520 Leadership and Organizational Behavior April 22, 2012 Consensual Relationship Agreements: A Case Study Introduction A consensual relationship agreement is a written contract between coworkers used by their employer to publicly disclose a romantic relationship. The purpose of this contract is to protect the employer from future litigation in the

Mr. Friehling – A Future Auditing Case Study

1215 words - 5 pages David Friehling will quite possibly be a future case study in auditing textbooks and courses throughout the United States. Mr. Friehling was the auditor for Bernard Madoff, who was recently convicted of running the largest Ponzi scheme ever uncovered through his business, Bernard L. Madoff Investment Securities, LLC (BMIS). Mr. Madoff claimed to actively oversee more than $65 billion in private investments (it was later revealed that roughly

Canter's Behavior Management Cycle: A Case Study

1413 words - 6 pages Canter’s Behavior Management Cycle: Case Study Grand Canyon University- EDU 450 October 5, 2013 When a teachers have a class with one or more disruptive behaviors it can be hard on teachers and students that come to school to teach and learn. According to the reading, “Effective teachers know that by motivating students to grasp directions quickly they can stay focused on instruction, which is critical to the learning process, and less

Case Study 1

562 words - 3 pages Problem 1 Activity Duration Predecessors A 3 Days --- B 4 Days --- C 6 Days --- D 2 Days A, B E 1 Days C F 3 Days D G 3 Days E, F H 7 Days D I 10 Days G a. For the above information, draw an AIB diagram. [pic] Slack or Float = LF – EF or LST – EST Activities on the critical path have zero slack/float. b. What is the Scheduled Completion of the Project? 22 Days c. What is

Case Study 1 - 19

4074 words - 17 pages "See You Again" (feat. Charlie Puth) [Charlie Puth:] It's been a long day without you, my friend And I'll tell you all about it when I see you again We've come a long way from where we began Oh, I'll tell you all about it when I see you again When I see you again (Hey) [Wiz Khalifa:] Damn, who knew? All the planes we flew Good things we've been through That I'll be standing right here talking to you 'Bout another path I know we

Ethics Case Study - Student Gets A Better Job Offer

992 words - 4 pages Ethics Case Study - Student Gets a Better Job Offer Step 1: Recognize: Define the ethical problem from all perspectives. • The student did not tell company B after accepting to work there that he already accepted to work company A. • The student did not notify career services office about any of this. Step 2: Clarify the Facts • The student agreed to work for company A at the beginning, because he did not hear from company B (yet

Urban Outfitters Continuing Case Study 4 - Marketing A Business

1144 words - 5 pages Urban Outfitters Continuing Case Study 4 Marketing a Business Felicia Lee Introduction to Business BUS 100 May 30, 2011 Abstract Marketing is a process which a company draws potential consumers/customers’ interest towards its goods and services. This process involves activities such as research, promotion

Case Study #1 Jules Ferry

558 words - 3 pages Jules Ferry: On French Colonial Expansion (1884) Regina Farr-Killian DeVry University: HIST405 Professor Thomas Keyser March 6, 2016 Jules Ferry is known for being a politician and twice the Prime Minister of France in the 18th century. Ferry wrote a pro-expansion speech to recite for the French Parliament on March 28, 1884. The main idea for his speech was to justify the policy on colonial expansion by addressing the need for

Similar Documents

Victoria Chemicals Plc Essay

1638 words - 7 pages has an equity cost of capital of 5.03% and a debt financing rate of 6.16%. Re=Rf+βRm-Rf Rf=5.2% 30 year rate Rm=5% (S&P SmallCap 600 Restaurants) Re=5.03% 5.03% = 0.052 + 0.85(0.05-0.052) WACC WACC=WeRe+Wdrd 10% Debt scenario 5.14%=.9(0.0503)+.1(0.0616) 30% Debt scenario 5.37% = .70.0503+.30.0616 Based on our WACC calculations neglecting tax, we found that as CPK acquires debt, their cost of capital increases. Based on this

Acct504 Case Study 1

332 words - 2 pages Case Study 1 (Part A) (Learning Objectives 4, 5, 6: Analyze the impact of business transactions on accounts; record (journalize and post) transactions in the books; construct and use a trial balance) During the first month of operation of Gordon Construction, Inc., completed the following transactions: June2 | Gordon received $55,000 cash and issued common stock to the stockholders. | 3 | Purchased supplies, $3,000, and equipment, $5,200

Case Study Week 1

600 words - 3 pages William Stewart Case Study Week 1 There are many nefarious computer activities that we must be aware of to keep our Company secure. Every day we are on top of the latest security trends and we do what we have to in order to protect the company. We strictly enforce the physical security, access controls, physical barriers, and use the best software money can buy to protect us. However, there are still ways we must protect ourselves from

Case Study 1: The Big Data Challenges

556 words - 3 pages Case Study 1: The Big Data Challenges James (JT) Clark Professor Elhag Ibrahim Information System for Decision-Making 10/31/2012 . Case Study 1: The Big Data Challenges Introduction I feel as though Volvo integrated the cloud infrastructure into its networks very well. It took the proactive approach instead of being reactive. It applied this to all aspects to their vehicles. Volvo chooses to have the cloud work for them and it