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    Heritage Case

    Uploaded by

    Gregory Cheng
    The document presents a net present value (NPV) analysis for two capital budgeting proposals for New Heritage Doll Company: 1) expanding into a "Match My Doll" clothing line and 2) developing a "Design Your Own Doll" program. It provides projections for revenue, costs, capital expenditures, and working capital for both proposals from 2010 to 2020. The NPV analysis will determine which proposal, if any, has a positive NPV and should be approved for investment.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Heritage Case

    Uploaded by

    Gregory Cheng
    244 views3 pages
    The document presents a net present value (NPV) analysis for two capital budgeting proposals for New Heritage Doll Company: 1) expanding into a "Match My Doll" clothing line and 2) developing a "Design Your Own Doll" program. It provides projections for revenue, costs, capital expenditures, and working capital for both proposals from 2010 to 2020. The NPV analysis will determine which proposal, if any, has a positive NPV and should be approved for investment.

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    © © All Rights Reserved

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    The document presents a net present value (NPV) analysis for two capital budgeting proposals for New Heritage Doll Company: 1) expanding into a "Match My Doll" clothing line and 2) developing a "Design Your Own Doll" program. It provides projections for revenue, costs, capital expenditures, and working capital for both proposals from 2010 to 2020. The NPV analysis will determine which proposal, if any, has a positive NPV and should be approved for investment.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    244 views3 pages

    Heritage Case

    Uploaded by

    Gregory Cheng
    The document presents a net present value (NPV) analysis for two capital budgeting proposals for New Heritage Doll Company: 1) expanding into a "Match My Doll" clothing line and 2) developing a "Design Your Own Doll" program. It provides projections for revenue, costs, capital expenditures, and working capital for both proposals from 2010 to 2020. The NPV analysis will determine which proposal, if any, has a positive NPV and should be approved for investment.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 3

    New Heritage Doll Company: Capital Budgeting

    NPV Analysis for Match My Doll Clothing Line Extension

    2010
    Revenue
    Revenue Growth

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    4,500

    6,860

    8,409

    9,082

    9,808

    10,593

    11,440

    12,355

    13,344

    14,411

    52.4%

    22.6%

    NA

    8.0%

    8.0%

    8.0%

    8.0%

    8.0%

    8.0%

    8.0%

    Production Costs
    Fixed Production Expense (excl depreciation)
    Variable Production Costs
    Depreciation

    575

    575

    587

    598

    610

    622

    635

    648

    660

    674

    2,035

    3,404

    4,291

    4,669

    5,078

    5,521

    6,000

    6,519

    7,079

    7,685

    152

    152

    152

    152

    164

    178

    192

    207

    224

    242

    2,762

    4,131

    5,029

    5,419

    5,853

    6,321

    6,827

    7,373

    7,963

    8,600

    Selling, General & Administrative

    1,250

    1,155

    1,735

    2,102

    2,270

    2,452

    2,648

    2,860

    3,089

    3,336

    3,603

    Total Operating Expenses

    1,250

    3,917

    5,866

    7,132

    7,690

    8,305

    8,969

    9,687

    10,462

    11,299

    12,203

    583

    994

    1,277

    1,392

    1,503

    1,623

    1,753

    1,893

    2,045

    2,209

    Total Production Costs

    Operating Profit

    (1,250)

    Working Capital Assumptions:


    Minimum Cash Balance as % of Sales

    NA

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    Days Sales Outstanding

    NA

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    Inventory Turnover (prod. cost/ending inv.)


    Days Payable Outstanding (based on tot. op. exp.)

    NA

    7.7x

    8.3x

    12.7x

    12.7x

    12.7x

    12.7x

    12.7x

    12.7x

    12.7x

    12.7x

    0.0x

    30.8x

    30.9x

    31.0x

    31.0x

    31.0x

    31.0x

    31.0x

    31.0x

    31.0x

    31.0x

    Capital Expenditures

    1,470

    952

    152

    152

    334

    361

    389

    421

    454

    491

    530

    Net Working Capital Accounts


    Cash
    Accounts Receivable
    Inventory
    Accounts Payable
    Net Working Capital

    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    317

    484

    593

    640

    692

    747

    807

    871

    941

    1016

    800

    NPV Analysis
    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    New Heritage Doll Company: Capital Budgeting


    NPV Analyss for Design Your Own Doll

    2010
    Revenue

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    6,000

    14,360

    20,222

    21,435

    22,721

    24,084

    25,529

    27,061

    28,685

    Revenue Growth

    NA

    139.3%

    40.8%

    6.0%

    6.0%

    6.0%

    6.0%

    6.0%

    6.0%

    1,650

    1,683

    1,717

    1,751

    1,786

    1,822

    1,858

    1,895

    1,933
    16,712

    Production Costs
    Fixed Production Expense (excl depreciation)

    Additional development costs (IT personnel)

    435

    Variable Production Costs

    2,250

    7,651

    11,427

    12,182

    12,983

    13,833

    14,736

    15,694

    Depreciation

    310

    310

    310

    436

    462

    490

    520

    551

    584

    435

    4,210

    9,644

    13,454

    14,369

    15,231

    16,145

    17,113

    18,140

    19,229

    Total Production Costs

    Selling, General & Administrative

    1,201

    1,240

    2,922

    4,044

    4,287

    4,544

    4,817

    5,106

    5,412

    5,737

    Total Operating Expenses

    1,201

    435

    5,450

    12,566

    17,498

    18,656

    19,775

    20,962

    22,219

    23,553

    24,966

    (1,201)

    (435)

    550

    1,794

    2,724

    2,779

    2,946

    3,123

    3,310

    3,508

    3,719

    Minimum Cash Balance as % of Sales

    NA

    NA

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    3.0%

    Days Sales Outstanding

    NA

    NA

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    59.2x

    Inventory Turnover (prod. cost/ending inv.)

    NA

    NA

    12.2x

    12.3x

    12.6x

    12.7x

    12.7x

    12.7x

    12.7x

    12.7x

    12.7x

    Days Payable Outstanding (based on tot. op. exp.)

    NA

    NA

    33.7x

    33.8x

    33.9x

    33.9x

    33.9x

    33.9x

    33.9x

    33.9x

    33.9x

    Operating Profit

    Working Capital Assumptions:

    Capital Expenditures

    4,610

    310

    310

    2,192

    826

    875

    928

    983

    1,043

    1,105

    Net Working Capital Accounts

    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

    Cash
    Accounts Receivable
    Inventory
    Accounts Payable
    Net Working Capital

    474
    1,000

    1135

    1598

    1694

    1796

    1904

    2018

    2139

    2267

    NPV Analysis
    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    2020

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