First adopter of a new technology

 

You have been brought in to assess whether Nucor should be the first adopter of a new technology. This requires a $340 million investment in a commercially unproven technology. If successful, Nucor can expand into the flat sheet segment that was previously a segment where only the large integrated steelmakers competed. This assignment requires that you combine qualitative information (e.g., industry and firm insights) with quantitative analysis in Excel (discounted cash flow analysis). After you read the case, answer both questions: background analysis and cash flow analysis. For cash flow analysis, you need to do calculations using Excel file attached in the assignment on Blackboard. YouTube link is included too, which provides explanations about how to do calculations using the attached Excel file step by step. Once you finished your calculations using Excel file, you can answer your second part of the assignment.

Background Analysis (15 points)
Industry: Of the three groups of steelmakers, what are some of the differences between integrated steelmakers and minimill steelmakers?
Nucor: What are some of the core competencies of Nucor? One way to think about this is to consider what its most distinguishing value chain (i.e., primary and support) activities are that have been difficult for others to imitate.

Cash Flow Analysis (15 points)
Use the “CF analysis-thin slab” Excel spreadsheet provided as a template to calculate the cash flows Nucor could expect if it adopted SMS’s CSP process. Most of the critical data is already in the spreadsheet, drawn primarily from Exhibits 12A and 12B. Please adhere to the following assumptions and conventions:

Don’t change any of the figures I have input.
Use 6.45% as the growth rate for the price of steel, not the historical 6.84%
Assume the entire $280 million construction cost is incurred in 1986
Depreciate the factory equally over 10 years (1989-1998). The spreadsheet says 12 years, which includes the two years the factory is under construction (1987, 1988). I want you to start in 1989, when the plant comes on line, and assume it loses all value over the next 10 years.
Note that in applying its investment criterion, Nucor ignored start-up expenses and working capital costs. Thus, in figuring the assets of the minimill in 1989 or later, those expenses need to be added to the asset base before calculating ROA.

By Nucor’s own investment criterion (i.e., 25% return on assets at five years), what will CEO Ken Iverson think about this investment?
As a consultant using more traditional investment criteria (such as NPV or IRR), what do you think about this investment from this part of the analysis?

Submit both Word file of answers for each questions and Excel file of your calculations.

You will build your group project on this individual assignment, so that make sure to understand this

Number of words: 200-300
YouTube link:

Sample Solution

nteraction between genetic factors and adverse childhood experiences. Social factors such as physical and sexual abuse during childhood as well as intrafamilial trauma (e.g. violence, neglect and losses) have been specifically associated with the diagnosis of BPD and may build the foundation for dysfunctional behaviours and psychological deficits present in patients (Gado, 2016). BPD patients come across as impulsive risk-takers, and being temperamental, which may result in angry outburst and overreactions. Consequently, these characteristics frequently lead to volatile interpersonal relationships being formed with people in their lives (Sack, 2015). Clinical signs of the disorder commonly include emotional dysregulation and impulsive aggressions; however, the most useful indication for a correct diagnosis is repeated self-injury or chronic suicidal tendencies (Lieb, et al., 2004). Patients with this complex illness also usually meets DSM criteria for other psychiatric disorders.

Numerous studies revealed that comorbidity in patients with BPD is a common occurrence. In fact, Soloff and colleagues (2005) found that suicide attempts in patients with comorbidity resulted in higher levels of lethality compared to patients that experience BPD on its own. The high rates of suicide in patients with comorbid BPD suggest that the self-destructive behaviour of these patients may not predominantly be due to the personality disorder itself, but instead be triggered by a secondary coexisting psychiatric disorder. For instance, an experiment comparing suicidal behaviour between BPD and comorbid BPD and major depressive episode, resulted in the latter generating a greater frequency of suicide attempts and a higher degree of lethal intent (Soloff, et al., 2000). By the same token, increased suicide attempts were exhibited in patients with a comorbid BPD and antisocial personality disorder compared to those without such comorbidity (Soloff, et al., 1994). While comorbidity of BPD with other high risk disorders may be a possible causal factor to suicidality, there is still insufficient information available to deduce whether particular combinations of disorders correlate with a higher lethality of suicidal behaviour. Additionally, comorbid BPD does not offer an explanation for the high mortality rates still present in individuals with BPD alone.

Other than external factors, features often found to be consistent with suicide risk in most psychiatric populations are individual personality traits, such as impulsivity and aggression, hence Brodsky and colleagues (1997) proposed that these characteristics also effect suicidal behaviour in BPD. Yen, et al. (2009) aimed to determine whether facets of impulsivity (e.g. urgency, lack of perseverance and lack of premeditation) could be predictor variables of suicide attempts over a seven-year follow-up evaluation. They used an interview rating system to collect data from a personality disorder sample to observe the course of the disorders – including suicidal behaviours – and ran correlation analyses between the predictor variables. The evaluation of impulsivity facets showed that lack of planning and premeditation was significantly associated with suicide attempt status. In my view, an important point to note is that Yen’s, et al. (2009) study measured impulsivity through self-harm and substance abuse. If these components were to be removed and tested individually, it could possibly reveal that these aspects specifically may be the predictors of suicide attempts rather than an impulsive character personality. Hence, a multivariate an

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