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    Tarea Heritage Doll Company

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    Felipe Hidalgo
    The document presents financial projections for New Heritage Doll Company (MHDC) and its new product line Design Your Own Doll (DYOD) from 2010-2020. MHDC is expected to see steady revenue growth and increasing profits over this period. DYOD revenue is projected to grow rapidly after its 2012 launch. MHDC must determine the appropriate discount rate to evaluate investments in expanding production capacity given the risks involved.

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    Tarea Heritage Doll Company

    Uploaded by

    Felipe Hidalgo
    32 views6 pages
    The document presents financial projections for New Heritage Doll Company (MHDC) and its new product line Design Your Own Doll (DYOD) from 2010-2020. MHDC is expected to see steady revenue growth and increasing profits over this period. DYOD revenue is projected to grow rapidly after its 2012 launch. MHDC must determine the appropriate discount rate to evaluate investments in expanding production capacity given the risks involved.

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    The document presents financial projections for New Heritage Doll Company (MHDC) and its new product line Design Your Own Doll (DYOD) from 2010-2020. MHDC is expected to see steady revenue growth and increasing profits over this period. DYOD revenue is projected to grow rapidly after its 2012 launch. MHDC must determine the appropriate discount rate to evaluate investments in expanding production capacity given the risks involved.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    32 views6 pages

    Tarea Heritage Doll Company

    Uploaded by

    Felipe Hidalgo
    The document presents financial projections for New Heritage Doll Company (MHDC) and its new product line Design Your Own Doll (DYOD) from 2010-2020. MHDC is expected to see steady revenue growth and increasing profits over this period. DYOD revenue is projected to grow rapidly after its 2012 launch. MHDC must determine the appropriate discount rate to evaluate investments in expanding production capacity given the risks involved.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    New Heritage Doll Company: Capital Budgeting

    Exhibit 1

    2010 2011 2012 2013 2014


    Revenue 4,500 6,860 8,409 9,082
    Revenue Growth 52.4% 22.6% 8.0%
    Production Costs
    Fixed Production Expense (excl depreciation 575 575 587 598
    Variable Production Costs 2,035 3,404 4,291 4,669
    Depreciation 152 152 152 152
    Total Production Costs 0 2,762 4,131 5,029 5,419
    Selling, General & Administrative 1,250 1,155 1,735 2,102 2,270
    Total Operating Expenses 1,250 3,917 5,866 7,132 7,690

    Operating Profit (1,250) 583 994 1,277 1,392


    Operating Profit/Sales
    SG&A/Sales

    Working Capital Assumptions:


    Minimum Cash Balance as % of Sales 3.0% 3.0% 3.0% 3.0%
    Days Sales Outstanding 59.2x 59.2x 59.2x 59.2x
    Inventory Turnover (prod. cost/ending inv.) 7.7x 8.3x 12.7x 12.7x
    Days Payable Outstanding (based on tot. op. 30.8x 30.9x 31.0x 31.0x

    Capital Expenditures 1,470 952 152 152 334


    Growth in capex -35.2% -84.0% 0.0% 119.3%

    Net Working Capital Accounts


    Cash 135 206 252 272
    Accounts Receivable 729 1,112 1,363 1,472
    Inventory 360 500 396 427
    Accounts Payable 317 484 593 640
    Net Working Capital 800 907 1,334 1,418 1,531
    Δ NWC 800 107 427 84 113
    NWC/Sales 20% 19% 17% 17%
    2015 2016 2017 2018 2019 2020
    9,808 10,593 11,440 12,355 13,344 14,411
    8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

    610 622 635 648 660 674


    5,078 5,521 6,000 6,519 7,079 7,685
    164 178 192 207 224 242
    5,853 6,321 6,827 7,373 7,963 8,600
    2,452 2,648 2,860 3,089 3,336 3,603
    8,305 8,969 9,687 10,462 11,299 12,203

    1,503 1,623 1,753 1,893 2,045 2,209

    3.0% 3.0% 3.0% 3.0% 3.0% 3.0%


    59.2x 59.2x 59.2x 59.2x 59.2x 59.2x
    12.7x 12.7x 12.7x 12.7x 12.7x 12.7x
    31.0x 31.0x 31.0x 31.0x 31.0x 31.0x

    361 389 421 454 491 530


    8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

    294 318 343 371 400 432


    1,590 1,717 1,855 2,003 2,163 2,336
    461 498 538 581 627 677
    692 747 807 871 941 1,016
    1,653 1,786 1,929 2,083 2,250 2,429
    122 132 143 154 167 180
    17% 17% 17% 17% 17% 17%
    New Heritage Doll Company: Capital Budgeting
    Exhibit 2 Selected Operating Projections for Design Your Own Doll

    2010 2011 2012 2013 2014 2015


    Revenue 0 6,000 14,360 20,222 21,435
    Revenue Growth 139.3% 40.8% 6.0%
    Production Costs
    Fixed Production Expense (excl depreciation) 0 1,650 1,683 1,717 1,751
    Variable Production Costs 0 2,250 7,651 11,427 12,182
    Depreciation 0 310 310 310 436
    Total Production Costs 0 4,210 9,644 13,454 14,369
    Selling, General & Administrative 1,201 0 1,240 2,922 4,044 4,287
    Total Operating Expenses 1,201 0 5,450 12,566 17,498 18,656

    Operating Profit (1,201) 0 550 1,794 2,724 2,779

    Working Capital Assumptions:


    Minimum Cash Balance as % of Sales 3.0% 3.0% 3.0% 3.0%
    Days Sales Outstanding 59.2x 59.2x 59.2x 59.2x
    Inventory Turnover (prod. cost/ending inv.) 12.2x 12.3x 12.6x 12.7x
    Days Payable Outstanding (based on tot. op. exp.) 33.7x 33.8x 33.9x 33.9x

    Capital Expenditures 4,610 0 310 310 2,192 826


    2016 2017 2018 2019 2020
    22,721 24,084 25,529 27,061 28,685
    6.0% 6.0% 6.0% 6.0% 6.0%

    1,786 1,822 1,858 1,895 1,933


    12,983 13,833 14,736 15,694 16,712
    462 490 520 551 584
    15,231 16,145 17,113 18,140 19,229
    4,544 4,817 5,106 5,412 5,737
    19,775 20,962 22,219 23,553 24,966

    2,946 3,123 3,310 3,509 3,719

    3.0% 3.0% 3.0% 3.0% 3.0%


    59.2x 59.2x 59.2x 59.2x 59.2x
    12.7x 12.7x 12.7x 12.7x 12.7x
    33.9x 33.9x 33.9x 33.9x 33.9x

    875 928 983 1,043 1,105


    Exhibit 1. MMDC

    FLUJO DE CAJA LIBRE 2010 2011 2012 2013 2014


    Tasa de Impuestos (t) 40%
    EBIT(1-t)=NOPAT (750) 350 596 766 835
    Depreciación 0 152 152 152 152
    Variación Capital de Trabajo Neto (800) (107) (427) (84) (113)
    Inversión en activo fijo (1,470) (952) (152) (152) (334)
    Free Cash Flow FCL (3,020) (557) 169 682 541
    FLC Acum (3,020) (3,577) (3,408) (2,726) (2,185)
    Tasa de perpetuidad 1%
    Tasa DESC VAN TIR PRI
    Tasa de descuento Riesgo Bajo 7.70% DEBEN ELEGIR SOBRE QUE TASA TRABAJAR PARA LOGRAL E
    Tasa de descuento Riesgo Medio 8.40%
    Tasa de descuento Riesgo Alto 9.00%
    2015 2016 2017 2018 2019 2020

    902 974 1,052 1,136 1,227 1,325


    164 178 192 207 224 242
    (122) (132) (143) (154) (167) (180)
    (361) (389) (421) (454) (491) (530)
    583 630 680 735 793 857
    (1,602) (972) (291) 443 1,237 2,094

    TASA TRABAJAR PARA LOGRAL EL VALOR RESIDUAL Y FLUJO DESCONTADO, VAN TIR Y PRI

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