NPV Graph and Spreadsheets
NPV Graph and Spreadsheets
NPV Graph and Spreadsheets
NPVvsDiscountRate:Merseysidevs.Rotterdam
$60
$50
NPVMerseyside(in$MM)
NPV(DCF)in$MM
$40
NPVRotterdam(in$MM)
NPVRotterdam NoLandSale
Incremental
IRR:
3.1%
$30
VictoriaChemicalsDiscountRate
$20
RotterdamIRR:
15.0%w/landsale
10.5%without
$10
MerseysideIRR:
19.5%
$0
0%
($10)
5%
10%
15%
DiscountRate(%)
20%
25%
30%
Assumptions
Annual Output (metric tons)
Output Gain/Original Output
Price/ton (pounds sterling)
Inflation Rate (prices and costs)
Gross Margin (ex. Deprec.)
Old Gross Margin
Energy Savings/Sales Yr. 1-5
Yr. 6-10
Yr. 11-15
250,000
7.0%
675
0.0%
12.50%
11.5%
1.25%
0.75%
0.0%
0
1
Year
Now
2008
1. Estimate of Incremental Gross Profit
New Output (tons)
267,500
Lost Output--Construction
(33,438)
New Sales (Millions)
157.99
New Gross Margin
13.8%
New Gross Profit
21.72
Old Output
Old Sales
Old Gross Profit
Incremental Gross Profit
250,000
168.75
19.41
2.32
-12.00
2.20
-12.00
-9.80
4.50 years
6.63
19.5%
(0.129)
0.024
0.015
Discount rate
Tax Rate
Investment Outlay (mill.)
Depreciable Life (years)
Salvage Value
WIP Inventory/Cost of Goods
Months Downtime, Construction
Preliminary Engineering Costs
Overhead/Investment
2
2009
267,500
180.56
13.8%
24.83
3
2010
267,500
180.56
13.8%
24.83
4
2011
267,500
180.56
13.8%
24.83
5
2012
267,500
180.56
13.8%
24.83
10.0%
30%
12.0
15
0
3.0%
1.5
0.5
3.5%
6
2013
267,500
180.56
13.3%
23.92
7
2014
267,500
180.56
13.3%
23.92
Exhibit 2
VICTORIA CHEMICALS (A)
Frank Greystock's DCF Analysis of Merseyside Project
(financial values in millions of British pounds)
Shares of Stock
8
2015
267,500
180.56
13.3%
23.92
9
2016
267,500
180.56
13.3%
23.92
92,891,240
10
2017
267,500
180.56
13.3%
23.92
11
2018
267,500
180.56
12.5%
22.57
12
2019
267,500
180.56
12.5%
22.57
13
2020
267,500
180.56
12.5%
22.57
14
2021
267,500
180.56
12.5%
22.57
15
2022
267,500
180.56
12.5%
22.57
250,000
168.75
19.41
5.42
250,000
168.75
19.41
5.42
250,000
168.75
19.41
5.42
250,000
168.75
19.41
5.42
250,000
168.75
19.41
4.52
250,000
168.75
19.41
4.52
250,000
168.75
19.41
4.52
250,000
168.75
19.41
4.52
250,000
168.75
19.41
4.52
250,000
168.75
19.41
3.16
250,000
168.75
19.41
3.16
250,000
168.75
19.41
3.16
250,000
168.75
19.41
3.16
250,000
168.75
19.41
3.16
4.67
4.48
0.19
4.67
4.48
0.19
4.67
4.48
0.19
4.67
4.48
0.19
4.70
4.48
0.22
4.70
4.48
0.22
4.70
4.48
0.22
4.70
4.48
0.22
4.70
4.48
0.22
4.74
4.48
0.26
4.74
4.48
0.26
4.74
4.48
0.26
4.74
4.48
0.26
4.74
4.48
0.26
1.39
0.42
1.20
0.42
1.04
0.42
0.90
0.42
0.78
0.42
0.68
0.42
0.59
0.42
0.55
0.42
0.55
0.42
0.55
0.42
0.55
0.42
0.55
0.42
0.55
0.42
0.55
0.42
3 61
3.61
3 80
3.80
3 96
3.96
4 10
4.10
3 32
3.32
3 42
3.42
3 51
3.51
3 55
3.55
3 55
3.55
2 20
2.20
2 20
2.20
2 20
2.20
2 20
2.20
2 20
2.20
1.39
-0.58
3.33
-6.47
-2.00
1.20
0.00
1.86
-4.61
1.04
0.00
3.81
-0.79
2.00
0.90
0.00
5.77
4.98
0.78
-0.03
3.08
0.68
0.00
3.07
0.59
0.00
3.05
0.55
0.00
3.03
0.55
0.00
3.03
0.55
-0.04
2.04
0.55
0.00
2.08
0.55
0.00
2.08
0.55
0.00
2.08
0.55
0.26
2.34
0.036
0.020
0.041
0.062
0.033
0.033
0.033
0.033
0.033
0.022
0.022
0.022
0.022
0.025
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
17,500
11.81
1.36
0.95
0.35
-0.60
2.74
-7.06
1.26
-5.80
3.22
-2.58
5.18
2.59
2.48
2.48
2.45
2.44
2.44
1.45
1.49
1.49
1.49
1.75
0.029
0.014
0.035
0.056
0.027
0.027
0.026
0.026
0.026
0.016
0.016
0.016
0.016
0.019
Assumptions
Annual Output (metric tons)
Output Gain Per Year/Prior Year
Maximum Possible Output
Price/ton (pounds sterling)
Inflation (prices and costs)
Gross Margin Growth Rate/Year
Maximum Possible Gross Margin
Gross Margin
Tax Rate
Investment Outlay (millions)
Now
2008
2009
2010
250,000
2.0%
267,500
675
0.0%
0.50%
15.0%
11.5%
30.0%
3.5
5
1
1
Discount rate
Depreciable Life (years)
Overhead/Investment
Salvage Value
WIP Inventory/Cost of Goods Sold
Terminal Value of Right-of-Way
Months Downtime, Construction
0
1
2
Year
Now
2008
2009
1. Estimate of Incremental Gross Profit
New Output
255,000 260,100
Lost Output--Construction
(106,250) (86,700)
New Sales (Millions)
100.41
117.05
New Gross Margin
11.5%
12.0%
New Gross Profit
11.55
14.05
Old Output
Old Sales
Old Gross Profit
Incremental Gross Profit
2. Estimate of Incremental Depreciation
Yr. 1 Outlays
Yr. 2 Outlays
Yr. 3 Outlays
Total, New Depreciation
3. Overhead
4. Pretax Incremental Profit
5. Tax Expense
6. After-tax Profit
7. Cash Flow Adjustments
Add back Depreciation
Less added WIP inventory
Capital Spending
3.50
Terminal Value, land
8. Free Cash Flow
(3.50)
(3.50)
DCF, Rotterdam =
3.74
IRR, Rotterdam =
12.5%
Earnings Per Share
(0.04)
Average EPS
0.0238
Payback
8.25
250,000 250,000
168.75
168.75
19.41
19.41
(7.86)
(5.36)
0.67
0.58
0.14
0.67
0.12
(8.65)
(2.59)
(6.05)
4
2011
5
2012
6
2013
7
2014
Exhibit 1
VICTORIA CHEMICALS (B)
ANALYSIS OF ROTTERDAM PROJECT
(financial values in millions of British pounds)
Shares
8
2015
9
2016
10
2017
11
2018
92,891,240
12
2019
13
2020
14
2021
15
2022
265,302 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500
(66,326)
134.31
180.56
180.56
180.56
180.56
180.56
180.56
180.56
180.56
180.56
180.56
180.56
180.56
12.5%
13.0%
13.5%
14.0%
14.5%
15.0%
15.0%
15.0%
15.0%
15.0%
15.0%
15.0%
15.0%
16.79
23.47
24.38
25.28
26.18
27.08
27.08
27.08
27.08
27.08
27.08
27.08
27.08
250,000 250,000
168.75
168.75
19.41
19.41
(2.62)
4.07
250,000
168.75
19.41
4.97
250,000
168.75
19.41
5.87
250,000
168.75
19.41
6.78
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
250,000
168.75
19.41
7.68
0.72
0.30
(6.38)
(1.91)
(4.47)
0.50
0.12
0.15
0.78
0.33
(3.73)
(1.12)
(2.61)
0.43
0.10
0.13
0.67
0.37
3.03
0.91
2.12
0.38
0.09
0.11
0.58
0.37
4.03
1.21
2.82
0.33
0.08
0.09
0.50
0.37
5.01
1.50
3.51
0.28
0.07
0.08
0.43
0.37
5.98
1.79
4.19
0.24
0.06
0.07
0.37
0.37
6.94
2.08
4.86
0.23
0.05
0.06
0.33
0.37
6.98
2.09
4.88
0.23
0.05
0.05
0.33
0.37
6.98
2.09
4.89
0.23
0.05
0.05
0.33
0.37
6.98
2.09
4.89
0.23
0.05
0.05
0.33
0.37
6.98
2.09
4.89
0.23
0.05
0.05
0.33
0.37
6.98
2.09
4.89
0.23
0.05
0.05
0.33
0.37
6.98
2.09
4.89
0.23
0.05
0.05
0.33
0.37
6.98
2.09
4.89
0.67
1.81
5.00
(12.20)
(15.70)
0.72
(0.42)
1.00
(4.32)
(20.02)
0.78
(0.44)
1.00
(2.40)
(22.42)
0.67
(1.19)
0.58
0.03
0.50
0.03
0.43
0.03
0.37
0.03
0.33
-
0.33
-
0.33
-
0.33
-
0.33
-
0.33
-
0.33
0.12
3.98
(18.44)
3.37
(15.07)
3.98
(11.10)
4.59
(6.51)
5.20
(1.31)
5.22
3.91
5.22
5.22
5.22
5.22
5.22
5.34
(0.13)
(0.05)
(0.03)
0.04
0.04
0.04
0.05
0.06
0.06
0.06
0.06
0.06
0.06
0.06
0.06
3
2010
2008
2009
2010
2011
10.0%
15
3.5%
0
3.0%
40
5
4
3
0
(3.50)
(12.20)
(3.50)
(15.70)
DCF, Rotterdam Adjusted for Full Erosion
at Merseyside =
0.69
IRR
10.5%
Earnings Per Share
(0.04)
(0.13)
Average EPS
0.0190
Payback
8.93
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
17,500
11.81
1.36
0.95
0.35
(0.60)
(4.32)
(20.02)
(2.40)
(22.42)
3.38
(19.04)
2.77
(16.27)
3.38
(12.89)
3.99
(8.90)
4.60
(4.29)
4.62
0.33
4.62
4.62
4.62
4.62
4.62
4.74
(0.05)
(0.03)
0.04
0.03
0.04
0.04
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05