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Executive Summary A feasibility study for the purchase of the Collinsville Plant was conducted on pro-forma data through 1984. A base case scenario without the incorporation of laminate technology and a scenario that included a one-time expenditure, of $2.25 million in 1980, for laminate technology were conducted. Identical free cash flows were determined using two slightly different FCF formats. Based on these cash flows and a WACC of 16% the NPV for the two scenarios were determined. The scenario with the laminate technology has a positive NPV $822 at a purchase price of $12 million (see appendix 2 & 2B) while the scenario without the laminate technology has a negative NPV of -$1,933 at the same purchase price (see appendix 1 & 1B). The chart below is a summary of the key figures from the two scenarios. IRR & MIRR’s are included for the two scenarios. The scenario without laminate technology has an IRR and MIRR less than the WACC confirming the negative NPV. Without Laminate With Laminate Purchase Price $12 M $12 M Discount rate 16% 16% NPV -$ 1,933 $ 822 IRR 11.0% 17.9% MIRR 12.0% 17.5% Main Body FCF: [Free Cash Flow = NOPAT + Depr.
Approximate Word count = 684
Approximate Pages = 2.7
(250 words per page double spaced)
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