Arauco Case

Note: You can assume that variable costs are constant so that the average of them is the variable cost relevant for a change in sales.

3. Estimate the project’s NPV. Would you recommend that Tucker Hansson proceed with the investment?

4. What is your opinion on the potential for the project to be completed on time?

Project C: This project will be a scale-up of a project done last year. All the same processes will be used. The costs for the material and other resources should be scalable based on last year’s costs.

592 Week 1 DQ 1 WBS Construction PROJ 592 Week 1 DQ 2 Project Cost Estimates and Assumptions PROJ 592 Week 2 DQ 1 Cost Components PROJ 592 Week 2 DQ 2 Estimating Processes PROJ 592 Week 3 DQ 1 Project Schedules PROJ 592 Week 3 DQ 2 Sensitivity Analysis PROJ 592 Week 4 DQ 1 Resource Allocation and Leveling PROJ 592 Week 4 DQ 2 Advanced Schedule Techniques PROJ 592 Week 5 DQ 1 Earned Value Calculation PROJ 592 Week 5 DQ 2 Project Monitoring and Control & EV PROJ 592 Week 6 DQ 1 Forecasting Project Completion Cost PROJ 592 Week 6 DQ 2 Project Control PROJ 592

* Finance: To build the new plant, the company needs to invest a large amount of capital, thus it should identify whether its current finance is enough for investing or it needs to attract more money. If not, the company may choose some kind of financing such as issuing bond, borrowing money or offering IPOs.

1.) "Revenue hours" represent the key activity that drives costs at Salem Data Services. Which expenses in Exhibit 2 are variable with respect to revenue hours? Which expenses are fixed with respect to revenue hours?

Paper recycling, on the other hand has been around for much longer. Pulp and paper plants in Canada have been using recycled material for more than 60 years (Bourdages, 1993, para. 4). One of the most obvious environmental benefits of using recycled paper materials, is that it will help to reduce the amount of trees being cut down for production of new paper. Overall, it is evident that there is an established recycling effort in Canada, featuring both positive and negative aspects.

Groupe Ariel SA of France is considering a project in Mexico. They need to analyze the net present value of the project, keeping in mind the exchange rates between Mexican Pesos and Euros in order to maximize their return. They also need to keep in mind the inflation rates over time and the risks involved with this type of investment.

The benefit of recycling on the environment is endless even if you are just recycling paper products it can be beneficial. According to a website on recycling paper and other products recycling a single run of the Sunday “New York Times” would save seventy five thousand trees. The amount of wasted land that is left behind by those seventy thousand trees. could have been a strong environment that was destroyed just for a single run of the “New York Times”. According to the same source recycling plastic saves twice as much energy as burning it in an incinerator. This energy used to burn the plastic is payed by the American people’s tax dollar that money could be saved by you just by simpling recycling. In the same source it says that approximately one billion trees worth of paper are thrown away every year in the United States this paper thrown away is sent to these giant landfills and cost millions of dollars to dispose of as where if it was recycled we could save money by not having to pay for the paper sent to landfill and save money by not having to have it burned down or stored. The average American uses eighty five million tons of paper a year; about six hundred and eighty pounds per person according to the source earlier

4. What kind of debt (agency debt, bank debt, or Rule 144a bonds) should the sponsors of the project use to fund the deal? What are the advantages and disadvantages of each kind of debt? In your view will project bonds receive an investment grade rating? What is the“weakest link” of the project? How can they improve the likelihood of getting an investment grade?

How attractive is the Super project in strategic and competitive terms? What potential risks and benefits does General

Arauco was formed in 1979 when two construction companies merged together to become one. A year after Arauco had already begun expanding, which included “purchasing land and plantations and the installing new technology.” The early expansion of Arauco paid off because the end result of expansion was tremendous. During the 1990s, Arauco introduced new systems and product lines to support more growth. By the early 2000s, Arauco was one of the world’s “premiere forestry enterprise.” Arauco. This led Alejandro Perez, “president and CEO of Chilean forestry company,” to propose a recommendation to invest in a “new state-of-the-art chemical pulp plant.” There are many factors to consider

Increase revenues for the financial segments by 15% each – (See Exhibit 2.A for revenue projections)

4. External Threats: Where close substitute things exist in a market, it enhances the likelihood of customers changing to decisions considering cost increases. This reduces both the vitality of suppliers and the interest of the market.