Subject category:
Finance, Accounting and Control
Published in:
1990
Length: 9 pages
Data source: Generalised experience
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Abstract
The case concerns a U.S.M. listed PLC which is considering a possible investment in a major new facility to produce blow-molded PET bottles for the food industry. It is also concerned with the financing of this facility. The teaching objectives of this case are: (1) A critical examination of the process of investment appraisal in the firm and the use of financial theory to decide whether the facility should be acquired. (2) Deciding on a relevant discount rate for the above. (3) An evaluation of the management''s view that both a rights issue and a share placing dilute shareholders'' equity. (4) Deciding on an appropriate financing of the investment.
About
Abstract
The case concerns a U.S.M. listed PLC which is considering a possible investment in a major new facility to produce blow-molded PET bottles for the food industry. It is also concerned with the financing of this facility. The teaching objectives of this case are: (1) A critical examination of the process of investment appraisal in the firm and the use of financial theory to decide whether the facility should be acquired. (2) Deciding on a relevant discount rate for the above. (3) An evaluation of the management''s view that both a rights issue and a share placing dilute shareholders'' equity. (4) Deciding on an appropriate financing of the investment.