The vice-president of operations must submit a valuation and recommendation to expand his plant to handle a doubling of sales over the next three years. Students will have to understand the process review for capital allocation in this large corporation in order to make their recommendation, as well as complete a discounted cash flow.
The treasurer of The University of Western Ontario was preparing a recommendation to the Spencer Hall board of directors concerning the financing of the $7.7 million expansion to Spencer Hall. The expansion was currently being financed with short-term loans but the board was concerned about increasing rates and was considering such hedging vehicles as interest rate swaps, caps and collars. A follow-up case is available (9A97N004).
James and Serena Udderlie were preparing a loan application to the Confederation Bank of Canada. They were requesting a $160,000 term loan, in addition to an operating loan, for the potential opening of a Cow's ice cream and clothing franchise. They needed to develop proforma income statements and balance sheets for the store's first two years of operation. They also wondered what collateral, if any, they would be able to provide the bank to secure against a loan, and what other terms the bank might deem necessary.
Scott Hall, vice-president of finance and chief financial officer of Champion Road Machinery Limited, was preparing a presentation on the company's proposed dividend policy for a board of directors' meeting scheduled for the middle of August. It had been only three months since the company completed its initial public offering, at which time the prospectus stated that: The company does not anticipate paying cash dividends on the common shares in the foreseeable future, but intends to retain future earnings for reinvestment in the business. However, earnings were well ahead of those projected in the prospectus and the company had succeeded in managing cash better than anticipated.
The vice-president of operations must submit a valuation and recommendation to expand his plant to handle a doubling of sales over the next three years. Students will have to understand the process review for capital allocation in this large corporation in order to make their recommendation, as well as complete a discounted cash flow.