Case Name :      Diamond Chemicals PLC (B): Merseyside And Rotterdam Projects

Authors :           Robert F. Bruner

Source :             Darden School of Business

Case ID :           UV4007

Discipline :        Finance

Case Length :    06 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

These two cases consider the capital investment decisions to be made by executives of this large chemicals firm in January 2001. The ‘A’ case presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The ‘B’ case reviews the same project but from one level higher, where the executive faces an either/or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues which include, among others, the identification of relevant cash flows, the critical assessment of a capital-investment evaluation system, the classic “cross-over” problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR).