Empirical Chemicals Ltd. Evaluation of F...
Bruner, Robert F.
Empirical Chemicals Ltd. Evaluation of Financial Forecast
F-1029 | Published February 8, 1991 | 8 pages Case
Collection: Darden School of Business
Product Details
A manager must decide which cash flows are relevant in the financial analysis of a plant-renovation proposal. Prominent issues include: overhead allocation, sunk costs, cannibalization of a related business, use of excess capacity, shareholder vs. manager perspective, and absorption of unrelated projects. This case is a narrower version of "Empirical Chemicals Ltd. (A)" (UVA-F-1020). Its prime teaching objective is to stimulate a discussion of relevant cash flows. Unlike the A case, it does not complete a discounted cash flow (DCF) analysis, which is left for the student to finish.
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