Case ID: 906B27     Solution ID: 317     Words: 2879 Price $ 75

Laurentian Bakeries Abridged Case Solution

Case Solution

The operations’ vice-president must present an evaluation and proposed strategy in order to develop his utility to cater to the increased saleto be experienced in the coming three years.Students must comprehend the methodology for capital distribution in this large company to be able to propose relevant strategies that may be adopted, as well as understand and finish a discounted cash flow.

Excel Calculations

Evaluation of Expansion Project at Laurentian Bakery

Net Cash Flows, NPV Calculations, IRR, Tax and Inflation Assumptions

Working 1: Calculation of Profit from Additional Sales

Working 2: Calculation of Additional Working Capital Needs

Working 3: Calculation of Company WACC

Retunrn on Equity, Risk-free Rate, Beta, Market Risk Premium

Return on Debt, WACC

Questions Covered

Assess the capital allocation policy at Laurentian Bakeries.

Calculate the project’s cost of capital. 

Calculate the project’s net present value.

As Danielle Knowles, what recommendation would you make concerning the Winnipeg plant expansion, and why?