Blue Ridge Mill

down(p) ridge Mill was considering a young accessory to the on-the-spot(prenominal) Long woods wood-yard. There would be 2 primary benefits source go away be to eliminate the need to purchase briefly-circuit-wood from an out-of-door supplier and second to hit an new business hazard to make out short wood on the blunt market. So the new wood yard would reduce the operating greet and append the receiptss. The new wood-yard will possess new employ science to which will allow them to produce tree-length logs called long-wood on-site and they would be capable to compete with the Shenandoah Mill in the short-wood market. Bob the command at the Blue ridge mill needed to recognize if the 18 million investiture in expanding the company was charge it. In send to call in if it was worth, first we drop together the relevant cash-flows. And it starts with 16million in detonating device in 2007 . The dilemma: Bob Prescott want to know if an enthronement of 18m illion (BIG ONES) on an on-site long wood wood-yard and new equipment would be worth the risk. Prescott realizes that in that respect are some benefits in adding in the wood-yard. First they would no longer need to purchase short wood from their opponent The Shenandoah Mill. The next benefit was creating a new opportunity to sell short wood on the open market and be able to level the competition surrounded by The Shenandoah Mill.

These benefits will help to lower the operating cost and mount revenues for the Blue Ridge Mill. If he decides to go through with the elaboration the winding would start within a f ew months and would bring forth to pay the ! 18million in two twelvemonths the first year 2007 he would have to drop 16million and the other 2million in 2008. The blowup would create an estimated savings on operations of 2million in 2008 and 3.5 million in the rest on the years. With the opportunity to sell short wood on the open market Prescott estimated revenues of 4million in 2008 and increase to 10million money box 2013. He estimated that the COGS would be 75% of sales revenue and the SG&A expense...If you want to get a full essay, order it on our website: BestEssayCheap.com

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