Case: Diamond Chemicals PLC (A)

Questions

1. What changes, if any, should Lucy Morris ask Frank Greystock to make in his discounted cash flow (DCF) analysis? Why? What should Morris be prepared to say to the Transport Division, the Director of Sales, her assistant plant manager, and the analyst from the Treasury Staff?

2. How attractive is the Merseyside project? By what criteria?

3. Should Morris continue to promote the project for funding?

You should recompute the corrected cash flows and the NPV.