Business Case Studies & Business Publications

International Paper: Longwood Woodyard P...

Eades, Kenneth M.,...

Case

International Paper: Longwood Woodyard Plant

Eades, Kenneth M.; Kannry, Brian

F-1252 | Published March 7, 2000 Case

Collection: Darden School of Business

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This case and the companion case, International Paper: Alternatives to the Longwood Woodyard Plant (UVA-F-1253), are designed to present the student with the challenge of formulating a discounted cash flow analysis for a capital investment decision. Students are asked to estimate the cost of capital and to conduct a sensitivity of their NPV estimates with respect to inflation, the annual savings figures, and the number of years over which the savings are received. The cases are designed for students who are learning or need a refresher on DCF analysis. Because of the basic issues covered, the cases work well with undergraduate, MBA, and executive education audiences. The cases also afford the opportunity to explore a variety of issues related to capital investment including: manager-owner agency problems, risk adjustment for discount rates, design of a capital budgeting system, the challenges of a cyclical capital intensive industry, and capital structure management