Home Uncategorized Nucor Case

Uncategorized

Nucor Case

The requirements are given below, although you only need to complete the circled section, real option analysis, because the others are already done. The answers for the other parts are given below. Please refer to the attached excel info for numerical data.

Operati

g assumptions

Integrated Mill

HR CR HR CR

Operating assumptions

/ hour

.00

.50 $23.50 $23.50

/ ton

0.00

$90.00

0.00

$80.00 $80.00 $80.00

.50

90.00% 90.00% 90.00%

75.00%

Labor

.00

5.50

1.00

0 0

0 0 35

38 9 23

Scrap

9.5

72.5

.00

																																								Exhibit	1
Modernized	Unmodernized
Thin-slab Minimill		Integrated Mill
		HR			CR
	Labor		$2 Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper																														0	0.00	$	2	3	5	23
	Scrap		$											9				$										8
Man hours / ton	1.										7	2.										6	2.85						4	3.90	5.85
Capacity Utilization				90.00%		75.00%
Operation costs / ton
$	35	$53.00	$67.00	$											10	$91.50	$						14
Ore	51	54	52		56
Coal	37.5		38	4																												0.5
Energy							24		9.5							25
100	102							13							19								15
Materials and supplies		72.5	71	93	95.5
Maintenance & repairs								17	26.5	29.5
Total costs / ton	$										22	$				283	$		261.5	$		349.00	$	300	$	403
							Revenue / ton	$				306.5	$				390.5	$	326.00	$	454.50	$		325.00	$		453.00

Summary

71.78

196 196 196

36.62%

CF analysis- thin slab
Original	Adj. 1 (price growth rate)	Adj. 2 (Operating Cost Growth Rate)	Adj. 3 (discount rate decreases)
				Year 5 CF:		71.78		104.84	87.26
				Year 5 Assets:	196
				Year 5 ROA:	36.62%	53.49%	44.52%

CF analysis-thin slab

4.00%

0 1 2 3 4 5 6 7 8 9 10

0 0 0

(12A)

0 0 0

0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

(12A)

0 0 0

0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35

Revenue / ton

306.5

.76

390.5

– Hot-rolled sheets (HR) 0.00 0.00 0.00

8.12

– Cold-rolled sheets (CR) 0.00 0.00 0.00

225

283

– Hot-rolled sheets (HR) 0.00 0.00 0.00

– Cold-rolled sheets (CR) 0.00 0.00 0.00

0.00 0.00 0.00

28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00

– Hot-rolled sheets (HR) 0.00 0.00 0.00

– Cold-rolled sheets (CR) 0.00 0.00 0.00

$0.00 $0.00

$0.00 $0.00 $0.00

$28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

30.00

0.00 0.00

71.78

)

15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

$0.00 $0.00

Year 5 CF: 71.78

Year 5 Assets:

Year 5 ROA: 36.62%

					Assumptions:
					Annual growth rate of price of steel												4.00%							6.84%					(historical)
					Annual growth rate of operating costs
					Tax rate							35.00%
					Discount rate						15.00%
		Thin Slab Minimill
								11										12
					1986							1987							1988						1989					1990					1991					1992		1993	1994		1995	1996	1997	1998
					Capacity(million of tons of steel)
			Shipments (12A)
																						– Hot-rolled sheets (HR)			0.25
																						– Cold-rolled sheets (CR)			0.175																			0.35
		– Hot-rolled sheets (HR) (12B)			3						18			331.51			344.77			358.56			372.90		387.82		403.33		419.47			436.25		453.69		471.84		490.72
					– Cold-rolled sheets (CR) (12B)			406.12			422.36			439.26			456.83			475.10			494.11		513.87		534.43		555.80			578.04		601.				16		625.	20
					Total revenue (shipment*rev/ton)
	86.19			179.28			186.45			193.91			201.67			209.73								21		226.85		235.92			245.36
	76.87			159.89			166.29			172.94			179.85			187.05			194.53			202.31		210.40		218.82
					Operating costs / ton
							– Hot-rolled sheets (HR) (12B)			234.00			243.36			253.09			263.22			273.75			284.70		296.08			307.93			320.25		333.05			346.38		360.23
				– Cold-rolled sheets (CR) (12B)			294.32			306.09			318.34			331.07			344.31			358.09		372.41		387.31		402.80			418.91		435.67		453.09
					Total operating costs(shipment*cost/ton)
	63.27			131.61			136.87			142.35			148.04			153.96			160.12			166.53		173.19		180.12
	55.71			115.87			120.51			125.33			130.34			135.56			140.98			146.62		152.48		158.58
		Depreciate over 10 years																																			28.00
					Income
22.92		47.67		49.58		51.56		53.62		55.77		58.00		60.32		62.73		65.24
21.16		44.02		45.78		47.61		49.51		51.49		53.55		55.69		57.92		60.24
					Total income																																																			$0.00	$16.08	$63.69	$67.36	$71.17	$75.14	$79.26	$83.55	$88.01	$92.65	$97.48
					Taxes		$5.63		$22.29		$23.57		$24.91		$26.30		$27.74		$29.24		$30.80		$32.43	$34.12
		Income after taxes		$10.45		$41.40		$43.78		$46.26		$48.84		$51.52		$54.31		$57.21		$60.23		$63.36
					Add back depreciation																																		$28.00
					Subtract capital expenditures				-$280.00
		Subtract startup costs								30.00
		Subtract working capital costs
					Cash flow				-280.00		98.45		69.40		7																																		4.2	76.84	79.52	82.31	85.21	88.23	91.36
			Internal rate of return (		IRR																																	15%
					Discounted cash flow	$85.61	$60.35	$62.42	$64.57	$66.82	$69.15	$71.57	$74.09	$76.72	$79.45
					Sum of discounted cash flow	$710.74
					Investment criterion: 25% ROA by year 5?
		196.00

CF analysis-thin slab – Adj #1

Assumptions:

Annual growth rate of price of steel 6.84% 6.84% (historical)

Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%

Thin Slab Minimill
0 1 2 3 4 5 6 7 8 9 10 11 12
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Capacity(million of tons of steel) 0 0 0
Shipments (12A)

0 0 0 0.25 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

0 0 0 0.175 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35

Revenue / ton

– Hot-rolled sheets (HR) (12B) 306.5

– Cold-rolled sheets (CR) (12B) 390.5

Total revenue (shipment*rev/ton)

– Hot-rolled sheets (HR) 0.00 0.00 0.00

– Cold-rolled sheets (CR) 0.00 0.00 0.00

Operating costs / ton
– Hot-rolled sheets (HR) (12B) 225 234.00 243.36 253.09 263.22 273.75 284.70 296.08 307.93 320.25 333.05 346.38 360.23
– Cold-rolled sheets (CR) (12B) 283 294.32 306.09 318.34 331.07 344.31 358.09 372.41 387.31 402.80 418.91 435.67 453.09

Total operating costs(shipment*cost/ton)
– Hot-rolled sheets (HR) 0.00 0.00 0.00 63.27 131.61 136.87 142.35 148.04 153.96 160.12 166.53 173.19 180.12
– Cold-rolled sheets (CR) 0.00 0.00 0.00 55.71 115.87 120.51 125.33 130.34 135.56 140.98 146.62 152.48 158.58

Depreciate over 10 years 0.00 0.00 0.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00

Income

– Hot-rolled sheets (HR) 0.00 0.00 0.00

– Cold-rolled sheets (CR) 0.00 0.00 0.00

Total income $0.00 $0.00 $0.00

Taxes $0.00 $0.00 $0.00

Income after taxes $0.00 $0.00 $0.00

Add back depreciation $0.00 $0.00 $0.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00
Subtract capital expenditures -$280.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Subtract startup costs 30.00
Subtract working capital costs 30.00

Cash flow -280.00 0.00 0.00

104.84

Internal rate of return (IRR) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Discounted cash flow $0.00 $0.00

Sum of discounted cash flow

Investment criterion: 25% ROA by year 5? Year 5 CF: 104.84

Year 5 Assets: 196.00

Year 5 ROA: 53.49%

			– Hot-rolled sheets (HR) (12A)				– Cold-rolled sheets (CR) (12A)
327.4646	349.86	373.79	399.36	426.68	455.86	487.04	520.36	5	55.95	593.98	634.60	678.01
417.2102	445.75	476.24		508.81	543.61	580.80	620.52	662.97	708.31	756.76	808.53	863.83
93.45	199.68	213.34	227.93		243.52	260.18	277.97	296.99	317.30	339.01
83.34	178.08	190.26	203.28	217.18	232.04	247.91	264.87	282.98	302.34
30.17		68.07	76.47	85.58	95.48	106.21	117.85	130.46	144.11	158.89
27.63	62.21	69.76	77.95	86.84	96.48	106.93	118.25	130.50	143.76
$29.81	$102.28	$118.22	$135.53	$154.32	$174.70	$196.78	$220.71	$246.61	$274.65
$10.43	$35.80	$41.38	$47.44	$54.01	$61.14	$68.87	$77.25	$86.32	$96.13
$19.37	$66.48	$76.84	$88.10	$100.31	$113.55	$127.91	$143.46	$160.30	$178.52
107.37	94.48	116.10	128.31	141.55	155.91	171.46	188.30	206.52
$93.37	$8												2.1	$91.17	$100.95	$111.57	$123.09	$135.57	$149.10	$163.74	$179.58
$1,230.30

CF analysis-thin slab 1-Adj #2

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)

Annual growth rate of operating costs

Tax rate 35.00%
Discount rate 15.00%

Thin Slab Minimill
0 1 2 3 4 5 6 7 8 9 10 11 12
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Capacity(million of tons of steel) 0 0 0
Shipments (12A)
– Hot-rolled sheets (HR) (12A) 0 0 0 0.25 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
– Cold-rolled sheets (CR) (12A) 0 0 0 0.175 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35

Revenue / ton
– Hot-rolled sheets (HR) (12B) 306.5 318.76 331.51 344.77 358.56 372.90 387.82 403.33 419.47 436.25 453.69 471.84 490.72
– Cold-rolled sheets (CR) (12B) 390.5 406.12 422.36 439.26 456.83 475.10 494.11 513.87 534.43 555.80 578.04 601.16 625.20

Total revenue (shipment*rev/ton)
– Hot-rolled sheets (HR) 0.00 0.00 0.00 86.19 179.28 186.45 193.91 201.67 209.73 218.12 226.85 235.92 245.36
– Cold-rolled sheets (CR) 0.00 0.00 0.00 76.87 159.89 166.29 172.94 179.85 187.05 194.53 202.31 210.40 218.82

Operating costs / ton

– Hot-rolled sheets (HR) (12B) 225

– Cold-rolled sheets (CR) (12B) 283

Total operating costs(shipment*cost/ton)

– Hot-rolled sheets (HR) 0.00 0.00 0.00

– Cold-rolled sheets (CR) 0.00 0.00 0.00

Depreciate over 10 years 0.00 0.00 0.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00

Income

– Hot-rolled sheets (HR) 0.00 0.00 0.00

– Cold-rolled sheets (CR) 0.00 0.00 0.00

Total income $0.00 $0.00 $0.00

$91.17

Taxes $0.00 $0.00 $0.00

Income after taxes $0.00 $0.00 $0.00

Cash flow -280.00 0.00 0.00

87.26

Internal rate of return (IRR) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

Discounted cash flow $0.00 $0.00

Sum of discounted cash flow

Investment criterion: 25% ROA by year 5? Year 5 CF: 87.26

Year 5 Assets: 196.00

Year 5 ROA: 44.52%

2.00%
229.50	234.09	238.77	243.55	248.42	253.39	258.45	263.62	268.90	274.27	279.76	285.35
288.66	294.43	300.32	306.33	312.45	318.70	325.08	331.58	338.21	344.98	351.87	358.91
59.69	121.77	124.21	126.69	129.23	131.81	134.45	137.14	139.88	142.68
52.56	107.21	109.36	111.55	113.78	116.05	118.37	120.74	123.16	125.62
26.50	57.51	62.24	67.22	72.44	77.92	83.67	89.71	96.04	102.68
24.31	52.68	56.93	61.39	66.08	71.00	76.16	81.57	87.25	93.20
$22.81	$82.18	$100.61	$110.52	$120.92	$131.83	$143.28	$155.29	$167.88
$7.98	$28.76	$31.91	$35.21	$38.68	$42.32	$46.14	$50.15	$54.35	$58.76
$14.83	$53.42	$59.26	$65.40	$71.84	$78.60	$85.69	$93.13	$100.94	$109.12
102.83	81.42	93.40		99.84	106.60	113.69	121.13	128.94	137.12
$89.42	$70.80	$75.88	$81.21	$86.81	$92.69	$98.86	$105.33	$112.12	$119.24
$932.37

CF analysis-thin slab- Adj #3

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%

Discount rate

Depreciate over 10 years 0.00 0.00 0.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00 28.00

Income
– Hot-rolled sheets (HR) 0.00 0.00 0.00 22.92 47.67 49.58 51.56 53.62 55.77 58.00 60.32 62.73 65.24
– Cold-rolled sheets (CR) 0.00 0.00 0.00 21.16 44.02 45.78 47.61 49.51 51.49 53.55 55.69 57.92 60.24

Total income $0.00 $0.00 $0.00 $16.08 $63.69 $67.36 $71.17 $75.14 $79.26 $83.55 $88.01 $92.65 $97.48

Taxes $0.00 $0.00 $0.00 $5.63 $22.29 $23.57 $24.91 $26.30 $27.74 $29.24 $30.80 $32.43 $34.12
Income after taxes $0.00 $0.00 $0.00 $10.45 $41.40 $43.78 $46.26 $48.84 $51.52 $54.31 $57.21 $60.23 $63.36
Add back depreciation $0.00 $0.00 $0.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00 $28.00
Subtract capital expenditures -$280.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Subtract startup costs 30.00
Subtract working capital costs 30.00

Cash flow -280.00 0.00 0.00 98.45 69.40 71.78 74.26 76.84 79.52 82.31 85.21 88.23 91.36

Internal rate of return (IRR)

10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Discounted cash flow $0.00 $0.00

Sum of discounted cash flow

Investment criterion: 25% ROA by year 5? Year 5 CF: 71.78
Year 5 Assets: 196.00

Year 5 ROA: 36.62%

10.00%
										10%
$89.50	$63.09	$65.26	$67.51	$69.85	$72.29	$74.83	$77.46	$80.21	$83.06
$743.05

CF analysis – Modernize

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Capacity(million of tons of steel) 0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2

Shipments (12A)

– Hot-rolled sheets (HR) (12A) 0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1
– Cold-rolled sheets (CR) (12A) 0

1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35

Revenue / ton

326.00

454.50

Total revenue (shipment*rev/ton)

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00

Operating costs / ton

– Hot-rolled sheets (HR) (12B) 261.50

– Cold-rolled sheets (CR) (12B) 349.00

Total operating costs(shipment*cost/ton)

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00

74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92

Income

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00

Total income

Taxes 74.92

Add back depreciation 0 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92
Subtract capital expenditures

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Cash flow -1,873 214.07

Internal rate of return (IRR)

Discounted cash flow

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Sum of discounted cash flow

Investment criterion: 25% ROA by year 5? Year 5 CF: 245.97
Year 5 Assets:

Year 5 ROA:

Modernized integrated mill
		1999			2000			2001			2002			2003			2004			2005			2006			2007		2008		2009		2010		2011
																																								1.35
– Hot-rolled sheets (HR) (12B)	339.04	352.60	366.71	381.37	396.63	412.49	428.99	446.15	464.00	482.56	501.86	521.94	542.81	564.53	587.11	610.59	635.02	660.42	686.83	714.31	742.88	772.59	803.50	835.64	869.06
– Cold-rolled sheets (CR) (12B)	472.68	491.59	511.25	531.70	552.97	575.09	598.09	622.01	646.90	672.77	699.68	727.67	756.78	787.05	818.53	851.27	885.32	920.73	957.56	995.87	1035.70	1077.13	1120.21	1165.02	1211.62
711.98	740.46	770.08	800.89	832.92	866.24	900.89	936.92	974.40	1013.38	1053.91	1096.07	1139.91	1185.51	1232.93	1282.24	1333.53	1386.87	1442.35	1500.04	1560.04	1622.45	1687.34	1754.84	1825.03
638.12	663.64	690.19	717.80	746.51	776.37	807.42	839.72	873.31	908.24	944.57	982.35	1021.65	1062.51	1105.01	1149.21	1195.18	1242.99	1292.71	1344.42	1398.20	1454.12	1512.29	1572.78	1635.69
	271.96		282.84		294.15		305.92		318.15		330.88		344.12		357.88		372.20		387.08		402.57		418.67		435.42		452.83	470.95	489.78		509.38	529.75	550.94		572.98	595.90	619.73	644.52	670.30	697.12
	362.96		377.48		392.58		408.28		424.61		441.60		459.26		477.63		496.74		516.61		537.27		558.76		581.11		604.36	628.53	653.67		679.82	707.01	735.29		764.70	795.29	827.10	860.19	894.59	930.38
	571.12		593.96		617.72		642.43		668.12		694.85		722.64		751.55		781.61		812.88		845.39		879.21		914.38		950.95	988.99	1028.55		1069.69	1112.48	1156.98		1203.26	1251.39	1301.44	1353.50	1407.64	1463.94
	490.00		509.60		529.98		551.18		573.23		596.16		620.00		644.80		670.59		697.42		725.31		754.33		784.50		815.88	848.51	882.46		917.75	954.46	992.64		1032.35	1073.64	1116.59	1161.25	1207.70	1256.01
Depreciate over 25 years																																									74.92
140.87	146.50	152.36	158.46	164.80	171.39	178.24	185.37	192.79	200.50	208.52	216.86	225.53	234.56	243.94	253.70	263.84	274.40	285.37	296.79	308.66	321.01	333.85	347.20	361.09
148.12	154.05	160.21	166.62	173.28	180.21	187.42	194.92	202.72	210.82	219.26	228.03	237.15	246.63	256.50	266.76	277.43	288.53		300.07	312.07	324.55	337.54	351.04	365.08	379.68
	214.07	225.63	237.65	250.15	263.16	276.68	290.74	305.37	320.58	336.40	352.86	369.97	387.76	406.27	425.52	445.53	466.35	488.00	510.52	533.94	558.29	583.62	609.96	637.36	665.85
78.97	83.18	87.55	92.11	96.84	101.76	106.88	112.20	117.74	123.50	129.49	135.72	142.19	148.93	155.94	163.22	170.80	178.68	186.88	195.40	204.27	213.49	223.08	233.05
Income after Taxes	139.15	146.66	154.47	162.60	171.05	179.84	188.98	198.49	208.38	218.66	229.36	240.48	252.05	264.08	276.59	289.60	303.13	317.20	331.84	347.06	362.89	379.35	396.48	414.28	432.80
	-1,873
221.58	229.39	237.52		245.97	254.76	263.90	273.41	283.30	293.58	304.28	315.40	326.97	339.00	351.51	364.52	378.05	392.12	406.76	421.98	437.81	454.27	471.40	489.20	507.72
14%
-$1,8		73.00	$186.14	$192.68	$199.47	$206.54	$213.89	$221.53	$229.48	$237.75	$246.35	$255.29	$264.59	$274.26	$284.32	$294.78	$305.66	$316.97	$328.74	$340.98	$353.70	$366.94	$380.70	$395.02	$409.91	$425.39	$441.50
n years
$5,499.58
1498.4
16.42%	0.3283133027

CF analysis – Unmodernized

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Capacity(million of tons of steel) 0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2

– Hot-rolled sheets (HR) 0

1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68

– Cold-rolled sheets (CR) 0

1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08

Revenue / ton

– Hot-rolled sheets (HR) (12B) 325.00

– Cold-rolled sheets (CR) (12B) 453.00

Total revenue (shipment*rev/ton)

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00 508.81

Operating costs / ton

– Hot-rolled sheets (HR) (12B) 300

– Cold-rolled sheets (CR) (12B) 403

Total operating costs(shipment*cost/ton)

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Income

– Hot-rolled sheets (HR) 0.00

47.24

– Cold-rolled sheets (CR) 0.00

Total income 0.00 99.84

Taxes 0

55.95

68.07

73.00

Add back depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Subtract capital expenditures 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cash flow 0 64.90 67.49 70.19 73.00 75.92 78.96 82.11 85.40 88.81 92.37 96.06 99.90 103.90 108.06 112.38 116.87 121.55 126.41 131.47 136.73 142.20 147.88 153.80 159.95 166.35
IRR
Discounted cash flow $0.00

n 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Sum of discounted cash flow

Investment criterion: 25% ROA by year 5? Year 5 CF: 75.92
Year 5 Assets: 0.00
Year 5 ROA:

	Unmodernized integrated mill
	Shipments (12A)
																								1.68
																								1.08
	338.00		351.52		365.58		380.20		395.41		411.23		427.68		444.78		462.58		481.08		500.32		520.34		541.15		562.79		585.31		608.72		633.07		658.39		684.73		712.12		740.60		770.22		801.03		833.07		866.40
	471.12		489.96		509.56		529.95		551.14		573.19		596.12		619.96		644.76		670.55		697.37		725.27		754.28		784.45		815.83		848.46		882.40		917.69		954.40		992.58		1032.28		1073.57		1116.52		1161.18		1207.62
567.84	590.55	614.18	638.74	664.29	690.86	718.50	7	47.24	777.13	808.21	840.54	874.16	909.13	945.50	983.32	1022.65	1063.55	1106.10	1150.34	1196.35	1244.21	1293.98	1345.73	1399.56	1455.55
529.16	550.33	572.34	595.24	619.04	643.81	669.56	696.34	724.19	753.16	783.29	814.62	847.21	881.09	916.34	952.99	991.11	1030.75	1071.99	1114.86	1159.46	1205.84	1254.07	1304.23
312.00	324.48	337.46	350.96	365.00	379.60	394.78	410.57	426.99	444.07	461.84	480.31	499.52	519.50	540.28	561.89	584.37	607.74	632.05	657.34	683.63	710.98	739.41	768.99	799.75
419.12	435.88	453.32	471.45	490.31	509.92	530.32	551.53	573.59	596.54	620.40	645.22	671.02	697.87	725.78	754.81	785.00	816.40	849.06	883.02	918.34	955.08	993.28	1033.01	1074.33
524.16	545.13	566.93	589.61	613.19	637.72	663.23	689.76	717.35	746.04	775.88	806.92	839.20	872.76	907.68	943.98	981.74	1021.01	1061.85	1104.33	1148.50	1194.44	1242.22	1291.91	1343.58
452.65	470.76	489.59	509.17	529.54	550.72	572.75	595.66	619.48	644.26	670.03	696.83	724.71	753.69	783.84	815.20	847.80	881.72	916.99	953.66	991.81	1031.48	1072.74	1115.65	1160.28
	Depreciate over 25 years (no expenditure to dep.)
43.68	45.43	49.13	51.10	53.14	55.27	57.48	59.78	62.17	64.66	67.24	69.93	72.73	75.64	78.67	81.81	85.08	88.49	92.03	95.71	99.54	103.52	107.66	111.97
56.16	58.41	60.74	63.17	65.70	68.33	71.06	73.90	76.86	79.93	83.13	86.46	89.91	93.51	97.25	101.14	105.19	109.39	113.77	118.32	123.05	127.98	133.09	138.42	143.96
103.83	107.99	112.31	116.80	121.47	126.33	131.38	136.64	142.10	147.79	153.70	159.85	166.24	172.89	179.81	187.00	194.48	202.26	210.35	218.76	227.51	236.61	246.08	255.92
34.94	36.34	37.80	39.31	40.88	42.51	44.22	45.98	47.82	49.74	51.73	53.79	58.18	60.51	62.93	65.45	70.79	73.62	76.57	79.63	82.81	86.13	89.57
	Total Income after Tax		64.90		67.49		70.19			75.92		78.96		82.11		85.40		88.81		92.37		96.06		99.90		103.90		108.06		112.38		116.87		121.55		126.41		131.47		136.73		142.20		147.88		153.80		159.95		166.35
$56.43	$58.69	$61.04	$63.48	$66.02	$68.66	$71.40	$74.26	$77.23	$80.32	$83.53	$86.87	$90.35	$93.96	$97.72	$101.63	$105.69	$109.92	$114.32	$118.89	$123.65	$128.59	$133.74	$139.09	$144.65
$2,350.13
N/A

CF analysis – Formerly Unmodern

Assumptions:
Annual growth rate of price of steel 4.00% 6.84% (historical)
Annual growth rate of operating costs 4.00%
Tax rate 35.00%
Discount rate 15.00%

Unmodernized integrated mill
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Capacity(million of tons of steel) 0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2
Shipments (12A)

– Hot-rolled sheets (HR) 0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1
– Cold-rolled sheets (CR) 0 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35

Revenue / ton
– Hot-rolled sheets (HR) (12B) 325.00 338.00 351.52 365.58 380.20 395.41 411.23 427.68 444.78 462.58 481.08 500.32 520.34 541.15 562.79 585.31 608.72 633.07 658.39 684.73 712.12 740.60 770.22 801.03 833.07 866.40
– Cold-rolled sheets (CR) (12B) 453.00 471.12 489.96 509.56 529.95 551.14 573.19 596.12 619.96 644.76 670.55 697.37 725.27 754.28 784.45 815.83 848.46 882.40 917.69 954.40 992.58 1032.28 1073.57 1116.52 1161.18 1207.62

Total revenue (shipment*rev/ton)

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00

Operating costs / ton

– Hot-rolled sheets (HR) (12B) 261.5 271.96 282.84 294.15 305.92 318.15 330.88 344.12 357.88 372.20 387.08 402.57 418.67 435.42 452.83 470.95 489.78 509.38 529.75 550.94 572.98 595.90 619.73 644.52 670.30 697.12
– Cold-rolled sheets (CR) (12B) 349.00 362.96 377.48 392.58 408.28 424.61 441.60 459.26 477.63 496.74 516.61 537.27 558.76 581.11 604.36 628.53 653.67 679.82 707.01 735.29 764.70 795.29 827.10 860.19 894.59 930.38

Total operating costs(shipment*cost/ton)
– Hot-rolled sheets (HR) 0.00 571.12 593.96 617.72 642.43 668.12 694.85 722.64 751.55 781.61 812.88 845.39 879.21 914.38 950.95 988.99 1028.55 1069.69 1112.48 1156.98 1203.26 1251.39 1301.44 1353.50 1407.64 1463.94
– Cold-rolled sheets (CR) 0.00 490.00 509.60 529.98 551.18 573.23 596.16 620.00 644.80 670.59 697.42 725.31 754.33 784.50 815.88 848.51 882.46 917.75 954.46 992.64 1032.35 1073.64 1116.59 1161.25 1207.70 1256.01

Depreciate over 25 years (no expenditure to dep.) 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92

Income

– Hot-rolled sheets (HR) 0.00

– Cold-rolled sheets (CR) 0.00

Total income 0.00 284.70

307.93 320.25

346.38

Taxes 0

Total Income after Tax

243.52

Add back depreciation 0 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92 74.92

Subtract capital expenditures

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Cash flow -1873

300.07

IRR

Discounted cash flow

n 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Sum of discounted cash flow

Investment criterion: 25% ROA by year 5? Year 5 CF: 291.41
Year 5 Assets:

Year 5 ROA:

709.80	738.19	767.72	798.43	830.37	863.58	898.12	934.05	971.41	1010.27	1050.68	1092.70	1136.41	1181.87	1229.14	1278.31	1329.44	1382.62	1437.92	1495.44	1555.26	1617.47	1682.17	1749.46	1819.43
636.01	661.45	687.91	715.43	744.04	773.81	804.76	836.95	870.43	905.24	941.45	979.11	1018.28	1059.01	1101.37	1145.42	1191.24	1238.89	1288.44	1339.98	1393.58	1449.32	1507.30	1567.59	1630.29
138.68	144.23	150.00	156.00	162.24	168.73	175.48	182.50	189.80	197.39	205.29	213.50	222.04	230.92	240.16	249.76	259.75	270.14	280.95	292.19	303.87	316.03	328.67	341.82	355.49
146.02	151.86	157.93	164.25	170.82	177.65	184.76	192.15	199.83	207.83	216.14	224.78	233.78	243.13	252.85	262.97	273.49	284.42	295.80	307.63	319.94	332.74	346.05	359.89	374.28
296.09	333.06	360.24	374.65	389.63	405.22	421.43	438.28	455.81	474.05	493.01	512.73	533.24	554.57	576.75	599.82	623.81	648.77	674.72	701.70	729.77
99.65	103.63	107.78	112.09	116.57	121.23	126.08	131.13	136.37	141.83	147.50	153.40	159.53	165.92	172.55	179.46	186.63	194.10	201.86	209.94	218.33	227.07	236.15	245.60	255.42
185.06	192.46	200.16	208.16	216.49	225.15	234.15	253.26	263.39	273.93	284.88	296.28	308.13	320.46	333.27	346.60	360.47	374.89	389.88	405.48	421.70	438.57	456.11	474.35
	-1873
259.98	267.38	275.08	283.08		291.41	309.07	318.44	328.18	338.31	348.85	359.80	371.20	383.05	395.38	408.19	421.52	435.39	449.81	464.80	480.40	496.62	513.49	531.03	549.27
16%
-$1,628.70	$226.07	$232.50	$239.20	$246.16	$253.40	$260.93	$268.76	$276.90	$285.37	$294.18	$303.34	$312.87	$322.78	$333.09	$343.80	$354.95	$366.54	$378.60	$391.14	$404.18	$417.74	$431.84	$446.51	$461.76	$477.63
$6,701.55
1,498.40
0.1944795621

Turn in your highest-quality paper
Get a qualified writer to help you with

“ Nucor Case ”

Get high-quality paper

NEW! AI matching with writer

Hire a Writer

Client Reviews

4.9

Sitejabber

4.6

Trustpilot

4.8

Our Guarantees

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Money Back

If you're confident that a writer didn't follow your order details, ask for a refund.

New to Your Trusted Assignment Help Service? Sign up & Save

Calculate the price of your order

Type of paper needed:

Pages:

You will get a personal manager and a discount.

Academic level:

We'll send you the first draft for approval by at

Total price:

$0.00

Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.

Power up Your Study Success with Experts We’ve Got Your Back.

Order Now Order Now