American Chemical & Norwich Cases
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Net present value (NPV), internal rate of return (IRR), and sensitivity analyses were performed with respect to a proposed acquisition by Dixon Corporation of the Collinsville Plant from American chemical. Analyses were performed under two assumptionsùthat the plant would be acquired without a new laminate technology and that the plant would be acquired with this technology. Using operating income projections for the Collinsville Plant and applying projected federal income tax rates applicable to Dixon Corporation, the NPV analyses (refer to Tables 1 and 2) indicated that the initial investment could not be recovered by Dixon under either acquisition assumption. Estimated IRRs are included at the end of each table. Sensitivity analysis indicated that the proposed investment is highly sensitive to changes in both sales prices and production costs.Present Value Analysis [Acquisition Without Laminate Technology] & IRR Year Item Amount ($) PVIF (16%) Present Value ($) 1979 Acquisition -12,000,000 1.000 - 12,000,000 1980 Optg Income 1,893,000 Year Net 791,160 .862 681,980 1981 Optg Income 3,328,000
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Some common words found in the essay are:
Income Tax, Optg Income, Item Amount, TOOL Project's, income tax, optg income, Estimated IRRs, Plant American, Summary Net, Corporation NPV, 900000 income, bond 900000 income, 900000 income tax, bond 900000, Collinsville Plant, Net Value, net rev increa, increa 290000, rev increa, net rev, laminate technology, operating income, rev increa 290000, based dixon, corporate tax rate,
Approximate Word count = 1083
Approximate Pages = 4 (250 words per page)
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