This case is about COSTS
PUBLICATION DATE: February 14, 2002 PRODUCT #: UV4007-PDF-ENG
Both of these cases consideredtheexecutives of this big compounds company in January 2001 to make the capital investment choices. The ‘A’ case presents a go/no-go job assessment involving progress to a polypropylene production plant. The ‘B’ case reviews the same job but from one degree higher, where the executive confronts either/or investment choice between two mutually exclusive endeavors. The aim of both cases would be to expose pupils to an extensive array of capital-budgeting problems which comprise, amongst others, the identification of related cash flows, the critical appraisal of a capital investment evaluation process, the classic “crossover” issue, in which job’s ranks differ on the idea of net present value (NPV) and internal rate of return (IRR).