Case 4 - Victoria Chemicals
Case 4 - Victoria Chemicals
Case 4 - Victoria Chemicals
1 2 3 4
Year Now 2008 2009 2010 2011
1. Estimate of Incremental Gross Profit in Merseyside
New Output (tons) 267,500 267,500 267,500 267,500
Lost Output--Construction (33,438)
New Sales (Millions) 157.99 185.98 191.56 197.31
New Gross Margin 13.8% 13.8% 13.8% 13.8%
New Gross Profit 21.72 25.57 26.34 27.13
NPV = 12.08
IRR = 23.3%
Payback Period = 4.28 Years -0.279990773
Incremental EPS = 0.0278
5 6 7 8 9 10 11 12 13
2012 2013 2014 2015 2016 2017 2018 2019 2020
267,500 267,500
265.16 273.12
12.5% 12.5%
33.15 34.14
250,000 250,000
247.82 255.25
28.50 29.35
4.65 4.79
250,000 250,000
247.82 255.25
11.5% 11.5%
28.50 29.35
250,000 250,000
247.82 255.25
28.50 29.35
0.00 0.00
4.65 4.79
6.96 7.17
6.58 6.78
0.38 0.39
6.78 6.98
6.78 6.98
0.00 0.00
0.38 0.39
0.55 0.55
0.42 0.42
3.68 3.82
1.10 1.15
2.58 2.67
0.55 0.55
-0.01 -0.01
3.11 3.21
Exhibit 2 - Frank Greystock's DCF Analysis (Assuming decline of 2.5% in 2008 and 5% in 2009 from the original output)
1 2 3 4
Year Now 2008 2009 2010 2011
1. Estimate of Incremental Gross Profit in Merseyside
New Output (tons) 267,500 267,500 267,500 267,500
Lost Output--Construction (33,438)
New Sales (Millions) 157.99 185.98 191.56 197.31
New Gross Margin 13.8% 13.8% 13.8% 13.8%
New Gross Profit 21.72 25.57 26.34 27.13
NPV = 8.80
IRR = 18.7%
Payback Period = 5.21 Years
Incremental EPS = 0.0254
m the original output)
5 6 7 8 9 10 11 12 13
2012 2013 2014 2015 2016 2017 2018 2019 2020
267,500 267,500
265.16 273.12
12.5% 12.5%
33.15 34.14
250,000 250,000
247.82 255.25
28.50 29.35
4.65 4.79
250,000 250,000
247.82 255.25
11.5% 11.5%
28.50 29.35
250,000 250,000
247.82 255.25
28.50 29.35
0.00 0.00
4.65 4.79
6.96 7.17
6.58 6.78
0.38 0.39
6.78 6.98
6.78 6.98
0.00 0.00
0.38 0.39
0.55 0.55
0.42 0.42
3.68 3.82
1.10 1.15
2.58 2.67
0.55 0.55
-0.01 -0.01
3.11 3.21
Exhibit 3 - Frank Greystock's DCF Analysis (Assuming decline of 5% in 2008 and 10% in 2009 from the original output)
1 2 3 4
Year Now 2008 2009 2010 2011
1. Estimate of Incremental Gross Profit in Merseyside
New Output (tons) 267,500 267,500 267,500 267,500
Lost Output--Construction (33,438)
New Sales (Millions) 157.99 185.98 191.56 197.31
New Gross Margin 13.8% 13.8% 13.8% 13.8%
New Gross Profit 21.72 25.57 26.34 27.13
NPV = 6.70
IRR = 16.2%
Payback Period = 5.91 Years -0.90934332
Incremental EPS = 0.024 -0.01764957 -0.014618 0.0281041 0.031215
0.023950555
m the original output)
5 6 7 8 9 10 11 12 13
2012 2013 2014 2015 2016 2017 2018 2019 2020
267,500 267,500
265.16 273.12
12.5% 12.5%
33.15 34.14
250,000 250,000
247.82 255.25
28.50 29.35
4.65 4.79
250,000 250,000
247.82 255.25
11.5% 11.5%
28.50 29.35
250,000 250,000
247.82 255.25
28.50 29.35
0.00 0.00
4.65 4.79
6.96 7.17
6.58 6.78
0.38 0.39
6.78 6.98
6.78 6.98
0.00 0.00
0.38 0.39
0.55 0.55
0.42 0.42
3.68 3.82
1.10 1.15
2.58 2.67
0.55 0.55
-0.01 -0.01
3.11 3.21
0.027738 0.028789