This case was made to present students with the challenges of developing a discounted cash flow (DCF) analysis for a strategically important capital investment decision. The trouble is representative of the majority corporate investment choices, but it's especially intriguing because of the enormous size of the American Centrifuge Project and the possibility of the project to appreciably impacting the stock price. Students must discover the applicable cash flows, paying close attention to the treatment of input costs, selling prices, timing of inflation, depreciation, and investment outlays.
Students are provided with a straightforward set of inputs to estimate the weighted average cost of capital of USEC although the primary objective of the case will be to concentrate on the approximation of cash flows. The case is made for students who are learning, or want a refresher on, DCF investigation. Because of the basic issues the case works nicely with undergraduate, MBA, and executive-education audiences. The case also affords the opportunity to investigate a variety of issues associated with capital-investment analysis, including related prices, step-by-step analysis, cost of capital, and sensitivity analysis. The case is a great example of the worth of a company as the worth of assets in position plus the net present value of future growth opportunities.
PUBLICATION DATE: November 05, 2008 PRODUCT #: UV1051-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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