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Appendix A Case Study Assignments Case Study Assignment 1: American Chemical Corporation Questions: 1

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Appendix A

Case Study Assignments

Case Study Assignment 1: American Chemical Corporation

Questions:

1. Estimate the cost of equity appropriate for the evaluation of the incremental cash flows associated with the Collinsville investment. Estimate the weighted average cost of capital appropriate for discounting the Collinsville plant’s incremental cash flows.

2. Project the incremental cash flows associated with the acquisition of the Collinsville plant without the laminate technology, and estimate the acquisition’s net present value. Project the incremental cash flows associated with the 1980 investment in laminate technology, and estimate the investment’s net present value.

3. What is the maximum price that Dixon should pay for the Collinsville plant?

4. How would you structure the deal to incentivize American Chemical Corporation to completely transfer its laminate technology to Dixon

The case writeups should not exceed three double-spaced typewritten pages, with as 

many tables and figures as you see fit. The report should address questions given in 

Appendix A and any other points you believe to be important for the analysis.