Case #5 –USEC Inc.Capital structure capital budgeting, cost of capital, sensitivity and decision analysis. (Ivey) (UVA-F-1546)Assess reporting systems, data quality and the...

Case #5 –







USEC Inc.








Capital structure capital budgeting, cost of capital, sensitivity and decision analysis. (Ivey) (UVA-F-1546)

Assess reporting systems, data quality and the analytical models used to support financial analysis and decision-making (5.1.3)

Case presentation requirements

a) Assess the underlying




alternative inputs





in analytical models


















b) Evaluate the




quality of the alternative inputs





and determine the most appropriate inputs


















c)




Develop analytical models





















d)




Evaluate the outputs





from analytical models in the context of the entity


















e) Explain the




limitations




of the specific analytical models used

Evaluate the entity’s cost of capital (5.2.5)

a) Determine the entity’s




cost of capital





using a range of methodologies


















b) Evaluate the




sensitivity





of an entity’s cost of capital to potential changes in its operations, underlying risk factors, and capital structure

Develops or evaluates capital budgeting processes and decisions (5.3.1)

a) Identify situations where the use of a




formal capital budgeting process





would assist in decision-making















b) Apply various tools, benchmarks, and methods to




evaluate and critique capital projects





based on accepted practices















c) Evaluate the f


easibility





of a capital project, incorporating the tax considerations















d)




Recommend





an appropriate course of action, considering the entity’s objectives