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Compact case
Case
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Reference no. UVA-F-1026
Authors: Bob Bruner
Published by: Darden Business Publishing
Originally published in: 1992
Version: 01.1998

Abstract

The managing director of this specialty foundry must decide whether to approve a major investment to automate part of her plant''s production process. The case presents information sufficient to build cash-flow forecasts of production costs incremental to this investment. Discounted-cash-flow (DCF) analysis reveals that this investment project is attractive but that the benefits hinge on important assumptions about plant volume of business and the manager''s ability to lay off workers over the objections of the union. The case may be used as a simple introduction to DCF analysis of investment projects by focusing on the analytical mechanics. The case can also be used to introduce students to the classic trade-offs in the capital-for-labor investment decision.
Location:
Size:
Small
Other setting(s):
1992

About

Abstract

The managing director of this specialty foundry must decide whether to approve a major investment to automate part of her plant''s production process. The case presents information sufficient to build cash-flow forecasts of production costs incremental to this investment. Discounted-cash-flow (DCF) analysis reveals that this investment project is attractive but that the benefits hinge on important assumptions about plant volume of business and the manager''s ability to lay off workers over the objections of the union. The case may be used as a simple introduction to DCF analysis of investment projects by focusing on the analytical mechanics. The case can also be used to introduce students to the classic trade-offs in the capital-for-labor investment decision.

Settings

Location:
Size:
Small
Other setting(s):
1992

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