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USEC Inc. Case Solution & Answer

This case is designed to introduce students to the challenges of developing a discount cash flow (DCF) analysis of strategic capital investment decision. Analytical, problem is representative of most investment decisions, but it is particularly interesting because of the enormity of the American Centrifuge project and the project’s potential to significantly affect the price of the shares. Students must determine the cash flows for particular attention to the processing of input costs, selling prices, timing of capital expenditures, depreciation and inflation. An important contribution is the appropriate cost of uranium, which support students should be included in the book value, while others argue that the market value should be used. Although the main objective of the case is to focus on the estimation of cash flows, the students have a simple set of inputs to estimate the weighted average cost of capital of USEC. The accommodation is designed for students who are learning or need an update on a DCF analysis. Because the basic issues covered, if it works well with undergraduate, MBA, and public education in general. The case also provides an opportunity to explore a variety of topics related to the analysis of capital investment, including relevant costs, differential analysis, capital costs and sensitivity analysis. The case is an excellent example of the value of a company and the value of assets in place and the net present value of future growth opportunities.
by
Kenneth Eades,
Lucas Perez
Ben Mackovjak
Source: Darden School of Business
11 pages.
Release Date: November 5, 2008. Prod #: UV1051-PDF-ENG
USEC Inc. Case Solution

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