Business Case Studies & Business Publications

Fonderia del Piemonte S.p.A.: The Falcon...

Schill, Michael J.

Case

Fonderia del Piemonte S.p.A.: The Falcon3 Capital Investment

Schill, Michael J.

F-2139 | Published January 29, 2026 | 3 Pages Case

Collection: Darden School of Business

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The managing director of a specialty foundry must decide whether to approve a major investment to improve the automation of part of her plant’s production process. The case presents information sufficient to build cash flow forecasts of production costs incremental to this investment. Discounted cash flow (DCF) analysis reveals that this investment project is attractive but that the benefits hinge on important assumptions about the plant’s business volume, the manager’s ability to lay off workers over the objections of a labor union, and the hurdle rate. This case provides an update for the case Fonderia del Piemonte S.p.A. (UVA-F-1764). The case is designed as an intermediate case in capital budgeting and for placement in the first-year core finance course at the Darden School of Business.

The case may be used to (1) introduce students to the mechanics of DCF analysis of go/no-go capital-investment decisions; (2) consider the principle of incremental analysis as the foundation for identifying relevant cash flows for a project; (3) explore the classic trade-offs in capital-for-labor investment, which is particularly relevant in the automation associated with artificial intelligence technology; and (4) review the analytical adjustments that are required to compare projects of unequal lives.