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Empirical Chemicals, Ltd. (B): Merseyside and Rotterdam Projects
Bruner, Robert F. Case F-1021 / Published February 10, 1993 / 5 pages.
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Product Overview

The B case extends the analysis in the A case (UVA-F-1020) to the next level, where the executive must choose between two mutually exclusive plant-renovation projects. Net present value (NPV) and internal rate of return rank the projects differently, affording an opportunity to (IRR) discuss the classic "cross-over" problem in capital investment analysis. Operational flexibility is a significant factor, permitting a discussion of the role of real options in investment analysis. The last element is politics as managers jockey for project approval. A student worksheet file is available for use with this case.

  • Overview

    The B case extends the analysis in the A case (UVA-F-1020) to the next level, where the executive must choose between two mutually exclusive plant-renovation projects. Net present value (NPV) and internal rate of return rank the projects differently, affording an opportunity to (IRR) discuss the classic "cross-over" problem in capital investment analysis. Operational flexibility is a significant factor, permitting a discussion of the role of real options in investment analysis. The last element is politics as managers jockey for project approval. A student worksheet file is available for use with this case.

  • Learning Objectives