...Case 3: Diamond Chemicals Diamond Chemicals operates two large polypropylene production plants, the Merseyside Works in England, and the other in Rotterdam, Holland. Diamond Chemicals’ plant manager Lucy Morris is currently examining a (British Pounds) 9 Million project to improve the plant, which has been under scrutiny for poor financial performance. Morris has assumed the responsibility of Merseyside Works, and has decided improvements need to be made. Although there is room for substantial operational improvement, the plant would need to be shut down for about 45 days in order to upgrade. Frank Greystock, Moriss’ controller, has developed a DCF summary of the proposed project. Although the plant’s throughput would surely increase after the upgrade, various company stakeholders have examined the proposed plan to ensure it would increase Diamond Chemical’s Profit. Morris is on the “right track” to improve Diamond Chemical’s existing manufacturing plant. Although Diamond Chemicals is one of the largest, and leading firms, more needs to be done in order to maintain and exceed this competitive position. I believe Morris is examining the correct shortfalls, but more scrutiny on Greystock’s analysis should be provided before a decision is made. More “what if” assumptions need to be made. In addition to examining this project’s DCF models, Diamond Chemical needs to provide other alternatives to the project. For example, various smaller, and larger, cost-reduction projects...
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...Based on the discussion with other divisions and teams, we believe that there are several adjustments to be made. First, with regard to the Transport Division’s memorandum, we determined that the charge for the use of excess rolling stock is non-material and the higher utilization rate is actually good for overall efficiency. It is, however, proper to allocate the accelerated schedule to purchase new rolling stock attributable to this project to the capital budget. We do so in the amount of $2 million discounted to 2001 using 10%. This change makes the total cost 10.65 million. The allocation of sales force and how to reach the sales target should be the responsibility of the sales and marketing department. Their concern regarding cannibalization of sales between the company’s two plants cannot be reliably modeled with the data available. However we should make adjustment on the loss of output due to construction, including both the 45 days shut down and a period for sales to grow back to their pre-construction base. Moreover, the loss should be based on pre-project output level, not new output. Thus, we increased the loss of output to 62,500 (250000 / 360 days * 45 days *2) tons, double the original figure. The EPC project should not be considered because it is unrelated to the poly renovation plan. In particular, there are no synergies between the two proposed projects that have been identified. The discount rate should not be changed to 7%, instead, we add the 3% to inflation...
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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 £1,100 per year2. The payback period for the project was 3.10 years, when considering the erosion of Rotterdam, this would increase to 3.46 years2. The net present value of Merseyside is £15.61 million and when considering erosion, the net present value is £11.37 million2. The internal rate of return is 33%, with the erosion, it is 28.2%2. Based on these four criteria, Merseyside is a valid project to consider. When considering the Rotterdam project, the effect on earnings per share was £6,000 with an average addition of £2,100 per year4. With the erosion of Merseyside, the earnings per share would be -£2,700 with an average addition of £1,200 per year4. The payback period of the Rotterdam project would be 13.68 years and with erosion, it would be 14.24 years4. The net present value is -£3.24 million and when considering erosion, it was -£6.61 million4. The internal rate of return is 8.04% and with erosion 5.91%4. The Rotterdam project does not meet the criteria due to a negative...
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...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 project expenditure to renovate and rationalize the polypropylene production line at the Merseyside Plant in order to make up for deferred maintenance and exploit opportunities to achieve increased production efficiency. The Merseyside plant was constructed in 1967. Diamond Chemicals produced polypropylene at two sites, Merseyside and in Rotterdam, Holland. The company was a supplier to customers based in Europe and in the Middle East. In order for the project to take place the entire polymerization line would need to be closed for 45 days, however, and because the Rotterdam plant was operating near capacity, Merseyside’s customers would buy from competitors. Frank Greystock, the controller at Diamond Chemicals believed that the loss of customers would just be temporary. As a result, the benefits...
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...Diamond Chemicals Plc (A) The Merseyside Project Case Analysis Team Members Ashish Massey Neil Demello Prabha Srinivasan Srishti Sarin Executive Summary This report provides analysis and evaluation of a capital budgeting project proposed to Senior Management in Diamond Chemicals. The project has been proposed to improve the product output of Diamond Chemicals’ Merseyside factory. However, problems such as capital expenditure, marketing cannibalization, discount rate, etc. have recently surfaced from different departments. Diamond Chemicals need to take all these factors into consideration and eventually decide whether or not they should carry out this project. Methods of analysis includes identification of the relevant...
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...Diamond Chemicals: Merseyside and Rotterdam Project Investment decision analysis Group Name- fInatics Group Members- 1. Nishant Kumar (MP13037) 2. Rahul Naredi (MP13039) 3. Samardarshi Sarkar (MP13046) 4. Shadab Akhtar (MP13050) Summary About the case 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, the Netherlands. Both factories are identical in size, age, and plant design. Merseyside is a factory built in 1967. Merseyside production process is the production process that are old, the best semi-continuous, and therefore has a total workforce of more than the other plant competitors. Diamond Chemicals is under pressure from investors to improve the financial performance due to economic slowdown worldwide and also the accumulation of common stock of the company. Revenue per share has fallen to 30 Euros at the end of 2000 from around 60 Euros at the end of 1999. Original Assumptions | | | Suggested Assumptions | | Annual Output | 250000 | | Annual Output | 250000 | Output Gain/Original Output | 7% | | Output Gain/Original Output | 7% | Price/ton (Pounds Sterling) | 541 | | Price/ton (Pounds Sterling) | 541 | Inflation rate (Prices and costs) | 0% | | Inflation...
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...Running head: KENT CHEMICAL CASE ANALYSIS Kent Chemical Case Analysis Careea Nordè, Karen Nostrant, Heather Smith, Mary Stephens, & William Tiemann Siena Heights University LDR 660-OA April 28, 2013 1 KENT CHEMICAL CASE ANALYSIS 2 Kent Chemical Case Analysis Kent, founded by the Fisher family in 1917, established its corporate headquarters just outside of Akron, Ohio in a small town called Kent (Bartlett & Winig, 2012). Kent became a leading global specialty-chemical company when it chose to diversify into additives and other specialty chemicals, developing these products within their own research laboratory in 1953 (Bartlett & Winig, 2012). Kent Chemical Products has grown throughout the years from its core domestic business to an international operation struggling to fully integrate globally. In 1998, CEO Ben Fisher decided global expansion would be Kent’s top priority stating, “Our goal is to remake Kent from a U.S. company dabbling in international markets to one that develops, manufactures, and sells worldwide” (Barlett & Winig, 2012, p. 3). This goal proved to be more difficult than first anticipated, when after two reorganizations Kent’s Chemical International president Luis Morales had not yet been able to align the international side of the business with the core domestic side (Bartlett & Winig, 2012). Unable to find a resolution internally and facing threats in the global economic environment, Kent’s three senior executives contacted an international consulting...
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...Running head: KENT CHEMICAL CASE ANALYSIS 1 Kent Chemical Case Analysis Careea Nordè, Karen Nostrant, Heather Smith, Mary Stephens, & William Tiemann Siena Heights University LDR 660-OA April 28, 2013 KENT CHEMICAL CASE ANALYSIS Kent Chemical Case Analysis Kent, founded by the Fisher family in 1917, established its corporate headquarters just outside of Akron, Ohio in a small town called Kent (Bartlett & Winig, 2012). Kent became a leading global specialty-chemical company when it chose to diversify into additives and other specialty chemicals, developing these products within their own research laboratory in 1953 2 (Bartlett & Winig, 2012). Kent Chemical Products has grown throughout the years from its core domestic business to an international operation struggling to fully integrate globally. In 1998, CEO Ben Fisher decided global expansion would be Kent’s top priority stating, “Our goal is to remake Kent from a U.S. company dabbling in international markets to one that develops, manufactures, and sells worldwide” (Barlett & Winig, 2012, p. 3). This goal proved to be more difficult than first anticipated, when after two reorganizations Kent’s Chemical International president Luis Morales had not yet been able to align the international side of the business with the core domestic side (Bartlett & Winig, 2012). Unable to find a resolution internally and facing threats in the global economic environment, Kent’s three senior executives contacted an international...
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...[pic] ✓ INTRODUCTION ✓ ALLOTROPHIC FORMS OF CARBONS ✓ APPLICATIONS Carbon from Latin: carbo "coal" is the chemical element with symbol C and atomic number 6. As a member of group 14 on the periodic table, it is nonmetallic and tetravalent—making four electrons available to form covalent chemical bonds. There are three naturally occurring isotopes, decaying with a half-life of about 5,730 years. Carbon is one of the few elements known since antiquity. There are several allotropes of carbon of which the best known are graphite, diamond, and amorphous carbon. The physical properties of carbon vary widely with the allotropic form. For example, diamond is highly transparent, while graphite is opaque and black. Diamond is among the hardest materials known, while graphite is soft enough to form a streak on paper (hence its name, from the Greek word "to write"). Diamond has a very low electrical conductivity, while graphite is a very good conductor. Under normal conditions, diamond has the highest thermal conductivity of all known materials. All carbon allotropes are solids under normal conditions with graphite being the most thermodynamically stable form. They are chemically resistant and require high temperature to react even with oxygen. The most common oxidation state of carbon in inorganic compounds is +4, while +2 is found in carbon monoxide and other transition metal carbonyl complexes...
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...JUNIOR 1 S Y 2000 - 2 0 0 1 V o l . 20 N o . 1 C O N T E N FOR LOVE OF DIAMONDS These brilliant gems are not only for fashion but find many uses in other industries as well. CHEMISTRY: BUILDING BLOCKS OF MODERN CIVILIZATION Understand the significance of chemistry throughout man’s history. NUCLEAR CHEMISTRY: TOWARDS A SAFE ENERGY SOURCE Is nuclear technology a boon or bane of science? Read on. T S ib er s, De ar BB su bs cr ng ga zin e is ma ki Ba to Ba la ni ma e ma ga zin e. to yo ur fa vo rit lled so me ch an ge s a new section ca c g the changes is Amon s wi th sc ie nt ifi .” It de al “P se ud os ci en ce pt io ns th at an d mi sc on ce ve no tio ns , my th s, e. Al so , we ha pu la r at on e tim we re po ” se ct io n to “C yb er wo rld ex pa nd ed ou r ac tiv ity se ct io n. e a we b- lin ke d in cl ud wi ll th es e ch an ge s We ho pe th at re nc e stu di es mo ur sc ie he lp ma ke yo jo y! re fu n! En re le va nt an d mo Th e Ed ito r MEDICINE’S POTENT MIXTURES AND SOLUTIONS Chemistry plays a major role in our existence through important medical applications. R E G U L A R F E AT U R E S 3 Science & Technology News 5 Filipino Scientists and Inventors BOARD OF ADVISERS Violeta Arciaga, Jaime F. Bucoy Jose C. Calderon, Victoria V. Cervantes, Juanita M. Cruz, Belen P. Dayauon Medical Facts and Fallacies 9 Livelihood Technology / I’d Like to Know 10 Cyber World CONSULTANT ...
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...FI 8320, Spring 2005 Cases and Readings in Corporate Finance [pic] [pic] [pic] [pic] Instructor Professor David C. Nachman Office: RCB 1239 Phone: 651-1696 email: dnachman@gsu.edu Office Hours: W 10:00 am – 2:00 pm, or by appointment Prerequisites FI 8000 CSP: 1, 2, 6 Course Description This course focuses on financial policy-making through case analyses, contemporary readings from the professional literature, and problem solving. The emphasis in the course is on investment and financing decisions and their impact on firm value and on capital market imperfections and their impact on the raising of corporate capital. The course also provides an opportunity for the study of additional topics of special current significance such as capital structure and dividend policy, corporate restructuring and the market for corporate control, real options, risk management, international capital budgeting and financing, financial planning and working capital management, project financing, reorganizations and advanced equity valuation. Course Material Required text material • (BMA) R. A. Brealey, S. C. Myers and F. Allen, Principles of Corporate Finance, 8th ed., McGraw- Hill/Irwin, Inc., 2006. •(RP) Reading Packet •(CP) Case Packet The required text (BMA) and the materials that make up the Case Packet (CP) are available at the GSU Book Store. The Reading Packet (RP) is available at ERes. Contents of (CP) and (RP) (with ERes access instructions) follow...
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...FI 4320, Spring 2005 Cases and Readings in Corporate Finance [pic] [pic] [pic] [pic] Instructor Professor David C. Nachman Office: RCB 1239 Phone: 651-1696 email: dnachman@gsu.edu Office Hours: W 10:00 am – 2:00 pm, or by appointment Prerequisites FI 4000 CSP: 1, 2, 4, 6 Course Description This course focuses on financial policy-making through case analyses, contemporary readings from the professional literature, and problem solving. The emphasis in the course is on investment and financing decisions and their impact on firm value and on capital market imperfections and their impact on the raising of corporate capital. The course also provides an opportunity for the study of additional topics of special current significance such as capital structure and dividend policy, corporate restructuring and the market for corporate control, real options, risk management, international capital budgeting and financing, financial planning and working capital management, project financing, reorganizations and advanced equity valuation. Course Material Required text material • (BMA) R. A. Brealey, S. C. Myers and F. Allen, Principles of Corporate Finance, 8th ed., McGraw- Hill/Irwin, Inc., 2006. •(RP) Reading Packet •(CP) Case Packet The required text (BMA) and the materials that make up the Case Packet (CP) are available at the GSU Book Store. The Reading Packet (RP) is available at ERes. Contents of (CP) and (RP) (with ERes access instructions)...
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... Apply the analysis of the “Ethics Line Diagram” methodology, in the case of the Challenger disaster [Fleddermann 4th Ed pages 7-12], to the “action” of: Morton Thiokol recommending the launch of Challenger to proceed, noting “Lund (of Thiokol) reversed his previous decision and recommended that the launch proceed.” [Fleddermann 4th Ed page 11]; and additionally noting that Thiokol were already aware of problems with the O-rings; and NASA did not want to postpone the launch, noting “NASA didn’t want to antagonize [Vice- President] Bush, a strong NASA supporter, by postponing the launch due to inclement weather after he had arrived.” [Fleddermann 4th Ed page 10]; and additionally noting that NASA was already informed that the predicted temperatures (in the low 20’s degF) was lower than the lowest 53 degF of previous launches where there was already “blow-by” problems of the O-rings. Use one Line-Drawing each for the Point-of-View of each of the two Parties, for their respective problems under consideration/ points under study. Include at least 3 intermediate points (comprising either Pi, points under study, and/or SCi scenarios). 1(b). For the same “actions” above, apply the analysis of the “Ethics Decision Flow-Charting” methodology for each of the two Parties, for their respective necessary actions/ recommendations under consideration. In each case, include at least two “decision diamonds”. Note: Students should not merely state their answers, but provide...
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...Analysis Diamond Chemicals Introduction This project belongs in the engineering-efficiency category; therefore, it has to fit at least 3 of 4 performance hurdles, which are 1. Impact on EPS; 2.Payback; 3.Discounted cash flow and 4. Internal rate of return. In this article, some of those involved explained and described their opinions; however, professional knowledge may have been lacking. Therefore, we will expound and clarify below. Management Analysis Capital Expenditure On the surface, making sure a project measures up to a range of consistent, prescribed criteria in order to be accepted would appear to be a sound business practice. But in our opinion, we think DC only focused on the financial management. We think they should utilize the strategy map strategy. A strategy map provides a uniform and consistent way to describe that strategy, so that objectives and measures can be established and managed. The strategy map provides the missing link between strategy formulation and strategy execution. (Norton and Kaplan, 2004 *1) Furthermore, DC won't only focus on the financial report; they also manage by human resource and other strategic elements. Also, any of the above financial calculations or assumption could bring the wrong settlement or the expectations will be seriously biased. Economic / Financial Analysis Transportation Costs The transportation division asked that the cost of tank cars required for additional throughput should be involved in the initial...
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...using an oxygen-acetylene torch is included. INTRODUCTION Several review papers portray the preparation and state of the art of DLC films [1-5]. There are basically two different types of DLC films: amorphous hydrogenated carbon (a-C:H), and amorphous carbon (a-C). They are differentiated on the number of sp3 (diamond like) vs. sp2 (graphite like) bonds, and the role that hydrogen (or OH) plays in the formation and structure of the film. A diamond like structure exists when sp3 bonds form between carbon atoms during the growing of a carbon film. The sp3 fraction is defined as: (Eq. 1) As the sp3 fraction increases the film tend more towards diamond properties and behavior. Diamond is a crystal with sp3 fraction of 1. The first kind of DLC, that we will refer to as Amorphous Hydrogenated Carbon (a-C:H), hydrogen plays a fundamental role. A diamond like structure will not form without the presence of hydrogen, which can have a concentration up to 50% (atomic) of the final film obtained. The sp3 fraction in a-C:H films is usually less than 50%. There are an assortment of techniques used to deposit a-C:H films [1], all essentially based on chemical vapor deposition (CVD). The more common ones are: hot filament CVD, microwave plasma CVD, plasma jet, arc jet, plasma torch, and even the simple oxyacetylene welding torch [6]. All these techniques work by activating the gas phase carbon-containing precursor. The precursor (say CH4) has to be diluted in an excess of...
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