Discussion and

Recommendation
BLANKAS, MIKKAELLA ANN
IDAGO, RICHARD
Discussion
 Thepipeline project needs a substantial sum of
money and this is larger than any other project of
Goodyear.
 Thispipeline, if built, will be the longest crude oil
pipeline in the United States.
 According to the forecast made by consulting firm, it
would take two years to build the pipeline and will
cost around $1.85 billion.
Advantages of the Project
 Reduction in cost of transportation is very significant.
 Supply through pipelines is very reliable. It is free
from obstacles in road and rail transport.
 In case of underground pipelines, the land in which
pipeline is laid can still be used for agricultural use.
 Itensures supply in remote areas where road ways
are not very good.
Disadvantages of the Project
 Unlike roads, no separate land acquisition is done
for pipeline. Sometimes it is laid sidewise along the
road, which is not very convenient if it is passing
through dense populated areas.
 Illegalpilferage and wastage due to leak is a
problem in pipelines.
 Like other big linear structures, patrolling and
maintenance of pipelines is a huge task.
 In case of chemicals and petroleum pipelines, any
leak can cause an accident.
Capital Budgeting Techniques
 Net Present Value
Decision Rule: If NPV is positive, ACCEPT.
If NPV is negative, REJECT.
If NPV is zero, STAY INDIFFERENT.

 Discounted Payback Period

Decision Rule: If DPP is less than the target period, ACCEPT.
If DPP is more than the target period, REJECT.
Analyzed data of Projected
Cash Flow of AAP
Recommendations
 Supply and logistics segment may outperform the
company. In order to prevent that, Goodyear should
have a strategic plan to sustain its performance.
 Goodyear should expand its pipeline project once the
company recovered from their AAP investment. This will
help boost and drive the double-digit growth rate of
their pipeline.
 Goodyear should continue to invest to other lines of
business (e.g., crude oil and gas) to improve its
profitability.