其A3 Diamond Chemicals PLC (A) and (B) Teaching Note Synopsis and Objectives These two cases present the capital investment decisions under consideration by executives of a large chemicals firm in January 2001. The A case (case 20) presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The B case (case 21) reviews the same project but from one level higher‚ where the executive faces an either/or investment decision between two mutually exclusive
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hese two cases to consider the investment decisions of managers of large chemical companies are made in January 2001. The A ‘case‚ a go / no-go project evaluation regarding improvements to a polypropylene production plant. The B ‘case‚ checked the same project‚ but from a higher level‚ where the executive is an either / or investment decision between two mutually exclusive projects. The goal of the two cases is to expose students to a broad range of capital budgeting … Read more » These two cases
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Version 1.5 DIAMOND CHEMICALS PLC (A): THE MERSEYSIDE PROJECT Late one afternoon in January 2001‚ Frank Greystock told Lucy Morris‚ “No one seems satisfied with the analysis so far‚ but the suggested changes could kill the project. If solid projects like this can’t swim past the corporate piranhas‚ the company will never modernize.” Morris was plant manager of Diamond Chemicals’ Merseyside Works in Liverpool‚ England. Her controller‚ Frank Greystock‚ was discussing a capital project that Morris wanted
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Case 20: Diamond Chemicals plc (A) --PT07 Group 10 INTRODUCTION: Diamond Chemicals is a large worldwide chemicals producer with two factories in Liverpool England and Rotterdam Holland. Both of their plants were built in 1967 with annual output of 250‚000 metric tons polypropylene. Compare with low-cost producer‚ the production cost per ton is 1.09 which is a little bit high than competitors (see Exhibition 1). With the decline EPS from £60 in 1999 to £30 in 2000 and worldwide economic slowdown
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OF FINANCIAL MANAGEMENT Diamond Chemicals PLC (B) Merseyside and Rotterdam Projects Table of content Key Issues 3 Analysis 3 Recommendations 8 Appendix 9 Appendix 1: Company Description 7 Appendix 2: Calculation on Merseyside Project Revision 7 Appendix 3: Calculation on Rotterdam Project without Right-of-way 7 KEY ISSUES The Diamond Chemical PLC as the producer of polypropylene has two production plants which are in Merseyside and Rotterdam. Both factories have similar
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Diamond Chemicals is a leading producer of polypropylene‚ the polymer used in a variety of products (ranging from medical products to packaging film‚ carpet fibers and automotive components) and is known for its strength and elasticity. Diamond Chemicals is producing polypropylene at Merseyside (England) and in Rotterdam (Netherlands). Both factories are identical in size‚ age and plant-design. They were both built in 1967. Merseyside production process is the production process that are old‚ the
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Diamond Chemicals PLC (A): The Merseyside Project The objective of this report is to demonstrate to the senior management of Diamond Chemicals PLC that sufficient capital should be allocated for the proposed £9 million expenditure to renovate and rationalize the polypropylene production line at the Merseyside Plant. The Merseyside Plant is aging and therefore it is losing its competitiveness relative to some of its industry peers. Because the industry is in a downturn and “an oversupply is in
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Corporate Finance Case Report Diamond Chemicals plc. : The Merseyside Project Introduction The goal of this report is to analyze and evaluate the capital budgeting decision of Ms. Morris and suggestion to the senior management of Diamond Chemicals PLC if sufficient capital should be allocated for the proposed £12 million expenditure to modernize and rationalize the polypropylene production line at the Merseyside Plant. The project has been proposed to improve
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VICTORIA CHEMICALS PLC THE MERSEYSIDE AND ROTTERDAM PPROJECTS I would choose Merseyside project rather than Rotterdam’s not only for its superior prospect based on the quantitative criteria‚ but also for a more rational strategy consideration. For the four investment criteria‚ here’s the elaboration. NPV. Since the two plants are of identical scale‚ age‚ design and similar project size‚ it makes sense to use NPV to compare the two projects. Not taken into account the erosion at Merseyside‚
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Diamond Chemicals PLC Executive Summary Diamond Chemicals is considering two mutually exclusive projects‚ the Merseyside project and the Rotterdam project‚ for the production of polypropylene When considering the Merseyside project‚ senior-management wants a positive impact on earnings per share. The addition to earnings per share was £28‚800 with an average addition of £2‚000 per year2. Calculated with erosion‚ the addition to earnings per share was £18‚800 with an average addition of £1
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