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 Clothing Extension” (MMDCE henceforth) and the “Design Your Own Doll” (DYOD henceforth). This paper will try and analyze some of the issues that may need to be taken into account by the division head before she chooses a project for final …show more content…
12 654.65 254.28 -1115.64262 204.11355 572.08641 406.39777 404.96023 2017 2018 2019 2020 1,753 1,893 2,045 2,209 1,052 1,136 1,227 1,325 192 207 224 242 421 454 491 530 1854.545 2002.8964 2163.1417 2336.1937 537.543 580.559 626.992 677.157 822.980 888.832 959.925 1,036.728 116.226 125.515 135.585 146.414 706.94 763.46 824.52 890.49

403.4889 401.95304 400.45583 398.96531 397.49716

For DYOD
EBIT EBIT*(1-t) Dep Capex A/R Inventory A/P WC FCFF NPV 2010 (1,201) (721) 0 4,610 0 0 0 0 (5,330.60) (2,434.69) 2011 0 0 0 0 0 0.000 0.000 0.000 0.00 2012 2013 2014 2015 2016 2017 2018 2019 2020 550 1,794 2,724 2,779 2,946 3,123 3,310 3,509 3,719 330 1,077 1,634 1,668 1,767 1,874 1,986 2,105 2,231 310 310 310 436 462 490 520 551 584 310 310 2,192 826 875 928 983 1,043 1,105 972.65753 2327.8937 3278.1153 3474.7866 3683.2758 3904.2798 4138.5443 4386.8573 4650.0649 345.624 785.958 1,065.210 1,129.615 1,197.406 1,269.245 1,345.393 1,426.124 1,511.698 502.716 1,163.618 1,627.065 1,734.715 1,838.813 1,949.142 2,066.081 2,190.060 2,321.468 815.565 1,134.668 766.027 153.426 172.182 182.515 193.473 205.065 217.373 (485.39) (58.09) (1,013.61) 1,124.59 1,182.40 1,253.34 1,328.69 1,408.27 1,492.83 730.90889 705.02538 685.62243 666.82331 648.40687 630.58614

0 -408.53914 -44.854382 -718.06476

3

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