NEW HERITAGE DOLL COMPANY FINA 6278 Case 1 I. Executive Summary New Heritage Doll Company is a U.S based children toy manufacturer with a well-known national brand: the New Heritage. With its existing three divisions, New Heritage proposed two potential investment projects in order to expand its business while the doll industry was facing a relatively low growth rate. The first proposal is the Match My Doll Clothing line expansion, which is to expand a new clothing product line aimed
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FINANCE CAPITAL BUDGETING SIMULATION WORKSHEET Part I – Loan Analysis |Group Members: | | |Loan Decision: | | |Loan Amount: |
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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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Asg 1 Ch 1-7 The majority of this assignment involves the case New Heritage Doll Company: Capital Budgeting. Please download from website listed in the syllabus. 1) Compare and contrast the business case for each of the two projects being considered. Which do you regard as a more compelling investment from a strategic view? 2) Using the projections given compute the NPV for each project. Create a data table comparing the NPV for each of the discount rates (low, medium, high risk)
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FINA6278 Financial Theory And Research Case Study on New Heritage Doll Company: Capital Budgeting Niweina Song Xin Gu Yao-‐Hsuan Yeh
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from a privately-owned company in the US, it serves as an illustrative example on how we compute NPV, IRR, payback period, and profitability index in practice. This procedure could be applied (with appropriate adjustments) to other investment decision making by other forms of organizations, including households, publicly-traded companies, not-for-profit organizations, or governments, both in the US and elsewhere. Instruction 1. Read “New Heritage Doll Company: Capital Budgeting” case. The case can
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The New Heritage Doll Company’s Vice-President of Production, Emily Harris, had to decide which of two proposals she should approve for the company’s upcoming capital budgeting meetings. The first project involved expanding an existing “Match My Doll Clothing” line, which had a proven record of success in the past. The second project introduced a new initiative called “Design Your Own Doll”, which used a web-based software enabling users to customize a doll’s features to the customers’ specifications
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New Heritage Doll Company Financial Assessment Executive Summary New Heritage Doll Company’s production division has two serious proposals that will be presented to the capital budget committee. The first proposal, named Match My Doll Clothing Line extension, will add year round seasonal clothing to Heritage’s product line. This proposal’s NPV was $7,326.11. The IRR was 24.10% and the MIRR was 20.68%. The Profitability Index was 3.08 and the payback period was 7.11 years. The value
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New Heritage Doll Company Capital Budgeting Simulation We took the approach that the greatest value is created when the choices being made provide the biggest bang for the buck; in other words, the greatest present value return for invested unit of capital, here the US dollar. The equation is the following: Profitability Index = PV of future cash flows/initial investment. In every year, and in every case, we chose the highest level of profitability that our budget constraints would allow
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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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