Dylan Steele
Professor Elhaj
New Heritage Doll Company
March 16th 2016
Case Memo

This case study was very interesting, and challenging because of the choice that had to be made between the two successful companies. The two investment projects New Heritage had to choose between were Design Your Own Doll and Match My Doll Clothing Line Expansion. After studying the case and figuring out some numbers without going to in depth, Match My Doll Clothing Line Expansion was more compelling at first. To begin, I used the total cost of initial expenditures that was given to appraise the two projects in order to see which one was more feasible. The four variables used in table 2 & 3 to find the total cost were initial expense, upfront R&D, plant property and equipment, and the investment in working capital. Design Your Own Doll had a higher total cost of $2291 in capital expenditures. Therefore, Match My Doll was more compelling at first glance since it had less capital invested on it. The capital budgeting decision criteria gives us plenty of information to help with the decision. After looking at variables in the criteria my decision to choose Match My Doll at first reformed toward Design Your Own Doll. Some of the strengths for Design Your Own Doll are its operating profit and its growth in revenue over its ten-year life. The first year after production, Design Your Doll’s growth in revenue was up 139.3%. After year 2015, its growth leveled off to 6% in perpetuity compared to Match My Doll whose growth leveled off to 8% in perpetuity. The case even states, “the capital committee generally insisted on relatively low perpetual growth rates.” The operating profit after maturity is at $3719 compared to Match My Doll, which was at $2209 after maturity. One of the weaknesses in the criteria for Design Your Doll is the total production costs. Design My Doll’s total