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Heritage Doll Company

Decent Essays

Introduction New Heritage Doll Company operates in doll industry, proposing products with unique storylines. Two project proposals will be considered during the firm’s capital budgeting meeting in October. The first one called Match My Doll Clothing Line is an expansion of an existing product line, consisting in matching girl and doll clothes. The second on is Design Your Own Doll, which will allow users to create a customize doll. The committee could decline both projects, so vice president Emily Harris should decide which project to support. She should consider NPV, IRR and payback metrics together with corporate goals to take the best decision Projects’ Description Match My Doll Clothing Line (MMDCL) is a successful existing line. Since it is a seasonal line for warm weather only, the proposal is to create “All Seasons Collection”. Marcy McAdams, the line’s brand manager believes project’s success, because of existing popularity of the line and moderate risk. She argues that new products will be profitable as existing ones, and that the company could obtain some discounts from suppliers lowering costs. She also forecasts a relatively large initial investment, but 35% of it is tax deductible. McAdams thinks these expenditures will be recovered quite easily because of the line’s popularity. Design Your Own Doll (DYOD) is an innovative project, and it represents a new opportunity of profit. It is pretty risky because it is different from existing products, but the company’s

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