<iframe src="https://www.googletagmanager.com/ns.html?id=GTM-PHTV9K7" height="0" width="0" style="display:none;visibility:hidden">
Loading
Skip to Main Content
Product cover image for Paul V. Dietrich Farms Ltd.: Expansion Plans

Paul V. Dietrich Farms Ltd.: Expansion Plans

Mary Gillett, Jessica Kelly

Product #:W27011
Supplier:Ivey
Discipline:Accounting, Finance
Setting:Canada, 2020
Details:Case (PDF) • 12 pages • 2022-04-19

Subjects:

Capital budgetingBudgets and budgetingFinance and investingAccounting

Industries:

Agriculture sector

Geography:

North AmericaCanada
Your Price:$9.71

Purchase this material with a free Educator Account and enjoy more benefits:

  • Free Educator Copy
  • Free Teaching Notes
  • Build your coursepack
  • Discounted academic price

In November 2020, Paul Dietrich was wrapping up his busy harvest season for the 1,100 acres of farmland he currently operated. Although the fall harvest season demanded much of Dietrich’s time and attention, he simply could not ignore an investment opportunity that had been presented to him. A local farmland owner was selling a 150-acre parcel of farmland that adjoined some land parcels already owned by Dietrich. Dietrich estimated that a competitive bid would need to be at least CA$20,000 per acre and the bid would need to be made immediately. He sat down to consider both short-term and long-term impacts on his cash flows.

Learning Objectives

This case was designed for undergraduate- and graduate-level courses on managerial accounting and control. The analysis requires understanding a number of concepts, including relevant costs for decision-making, cash flow projection, long-term investment decision-making, and sensitivity analysis. In addition to these concepts, the case offers the opportunity to explore the dynamics of an entrepreneur–banker relationship when faced with a new business opportunity. After working through the case and assignment questions, students will be able to
  • identify risks, opportunities and key success factors for an industry;
  • identify relevant costs and project monthly cashflows;
  • calculate and interpret net present value, internal rate of return, and discounted cash flow;
  • conduct a thoughtful sensitivity analysis that reflects an understanding of the industry and business risk profiles; and
  • evaluate a business expansion opportunity from the perspective of a prospective funder.
Loading
Case Study: Paul V. Dietrich Farms Ltd.: Expansion Plans (English version) | Ivey Publishing