Overview of American Chemical Corporation

9 million) to arrive at plant's Net value of $3 million [5+(-1.9)] (refer Exhibit F).
             These calculations suggest that non-laminated plant would be a negative investment, unless the benefits from laminate technology installation are earned as per the plan.
             Sensitivity Case.
             The above analysis was performed as a base case, without assuming any variation in the expected cash flows and plans in development of laminate technology. A sensitivity case analysis is performed, where the NPV of plant is calculated considering any deviations in the expected cash flows or any delay in the installation of Laminate technology (refer Exhibit - Sensitivity Case). This has shown a detailed working if the cash flows change by 3%, 5%, 7%, 9%, 11% or 15%, all showing positive NPV of the plant if there is no delay in installation of Laminate technology, while the delays in Laminate technology by one or two years would decrease also decrease the NPV but NPV is negative only in the worst case where where cash flows decrease by 15% and installation is delayed up to 2 years, thus not bringing the present value of benefits associated with Laminate technology. This reflects the strength attached with the laminate technology. The results can be summarized as;.
             Variation in cash flows.
             0%.
             3%.
             5%.
             7%.
             9%.
             11%.
             15%.
             NPV with laminate technology as per plan.
             3,020 .
             2,743 .
             2,558 .
             2,373 .
             2,189 .
             2,004 .
             1,635 .
             NPV-If Laminate installation delayed 1 year.
             2,111 .
             1,834 .
             1,649 .
             1,464 .
             1,280 .
             1,095 .
             726 .
             NPV-If Laminate installation delayed 2 year.
             1,203 .
             926 .
             741 .
             556 .
             372 .
             187 .
             (182).
             Evaluation on Economic Grounds.
             Following points evaluates the economic aspect of the proposal;.
             1- Plant's economic history is a reflection of success which is quantifiable from its consistency of increasing profits, as compared from 1975 to 1978. (Op. Profit to net asset: 1975=17%,78=90%, Op.