New Heritage Doll Company Capital Budgeting Analysis The New Heritage Doll Company is a company that makes dolls for children between the ages 3 – 12 years. The company has revenues of 245 million USD and an operating profit of 24 million USD. The company has three major divisions – The Retailing division, the Licensing division and the Production division. The head of the production division has to choose between two capital intensive projects that have been presented to her - the “Make My Doll
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4212 SEPTEMBER 15, 2010 TIMOTHY LUEHRMAN HEIDE ABELLI New Heritage Doll Company: Capital Budgeting In mid-September of 2010, Emily Harris, vice president of New Heritage Doll Company’s production division, was weighing project proposals for the company’s upcoming capital budgeting meetings in October. Two proposals stood out based on their potential to strengthen the division’s innovative product lines and drive future growth. However, due to constraints on financial and managerial
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A mediados de septiembre del 2010, Emily Harris, vicepresidenta de la división de producción de New Heritage Doll Company, analizaba propuestas de proyectos para las próximas reuniones de presupuestos de capital de la compañía. Se presentaron dos propuestas que podrían beneficiar la innovación y tener un crecimiento en el futuro, pero debido al manejo financiero, solamente se podría aprobar uno de ellos, además de saber que las licencias y divisiones minoristas de la empresa promoverían proyectos
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1. Compute the Free Cash Flows for the years 2010 to 2020 for both projects See excel File attached. Assumptions: * We assumed the required working capital in table 2 and 3 is the amount required in 2010, for further years we computed the WCR based on the ratio’s of minimum cash balance, number of days sales outstanding, inventory turnover and days payable outstanding (deducting the depreciation as instructed) * We assumed the SG&A and fixed production costs were project specific
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New Heritage Doll New Heritage Doll Company: Capital Budgeting MGT 6060 20 September 2011 Overview Two business proposals from the Production division of the New Heritage Doll Company are being considered for submission to the capital budgeting committee. Only one proposal will be submitted. The proposals are: Match My Doll Clothing Line Expansion and Design Your Own Doll. A systematic process will be used to determine which proposal to recommend. Criteria Include: 1. Comparison of the business
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Universidad Adolfo Ibáñez Caso: New Heritage Doll Company María Eliana Errázuriz Raimundo Muñoz Josefina Olivera Antonio Poblete Luis Felipe Santa María
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New Heritage Doll Company: Capital Budgeting MGT 6060 20 September 2011 Overview Two business proposals from the Production division of the New Heritage Doll Company are being considered for submission to the capital budgeting committee. Only one proposal will be submitted. The proposals are: Match My Doll Clothing Line Expansion and Design Your Own Doll. A systematic process will be used to determine which proposal to recommend. Criteria Include: 1. Comparison of the business cases
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of going with low and medium risk projects similar to my first simulation, the projects that were chosen were all high. If the risk was not there, there was no interest. Simulation number three was focused on the licensing portion of the Heritage Doll Company. The three divisions of the company were production, retail, and
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New Heritage Doll Company: Capital Budgeting Match my doll clothing line expansion 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Ingresos 4,500 6,860 8,409 9,082 9,808 10,593 11,440 12,355 13,344 14,411 Crecimiento de Ingresos 52.4% 22.6% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% Costos de Producción Gastos Fijos de Producción (sin depreciación) 575 575 587 598 610 622 635 648 660 674 Costos Variables
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New Heritage Doll Company: Capital Budgeting Solution Sheet 1 NPV Analysis for Match My Doll Clothing Line Extension 2010 2011 4 500 NA 2012 6 860 52,44% 2013 8 409 22,58% 2014 9 082 8,00% 2015 9 808 8,00% 2016 10 593 8,00% 2017 11 440 8,00% 2018 12 355 8,00% 2019 13 344 8,00% 2020 14 411 8,00% 0 1 250 1 250 575 2 035 152 2 762 1 155 3 917 575 3 404 152 4 131 1 735 5 866 587 4 291 152 5 029 2 102 7 132 598 4 669
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