1. Compute the Free Cash Flows for the years 2010 to 2020 for both projects See excel File attached. Assumptions: * We assumed the required working capital in table 2 and 3 is the amount required in 2010, for further years we computed the WCR based on the ratio’s of minimum cash balance, number of days sales outstanding, inventory turnover and days payable outstanding (deducting the depreciation as instructed) * We assumed the SG&A and fixed production costs were project specific and therefore included them in the FCF analysis 2. Compute the NPV of both projects. Which would you recommend? What if they are not mutually exclusive? NPVMMDC = 7,150 NPVDYOD = 7,298 Based solely on the NPV analysis we would …show more content…
We might also want to take competitor actions into account and how these may affect our decision making (e.g. perhaps first mover advantages in the design your own doll project might be very positive, but if a competitor introduces a similar value proposition between the investment decision and market introduction (2 years later), this may have a negative impact on the projects profitability) * We have not taken cannibalization into account for the DYOD project. It may actually move customers away from the standard doll. Advantages * We are not looking at which projects may have a positive impact on the company’s other business units. Perhaps one project stimulates the retail of licensing business more than the other. * The MMDC project could allow you to start using fashion outlets as an additional sales channel for the clothes and even increase sales of all dolls in the process * The MMDC project will be moving in another product category (fashion) and may create a brand name
The first project proposal is Match My Doll Clothing line expansion consisted of expanding matching doll and child’s clothing and accessories. The second project proposal is Design Your Own Doll by creating customizable “one of a kind” doll features through the company’s website. The project selection criteria would base on quantitative and qualitative analysis. The quantitative analysis would base on the evaluation of discounting cash flow forecasts to determining the Net Present Value (NPV), Internal Rate of Return (IRR), and the Payback period of each proposed project. The qualitative analysis would include the potential project value of the company’s overall strategy, innovation, key project risks, and the project interdependencies to the whole company.
Art Doll can be a useful reference for artists. Art Doll can be posed in any human position. Crow Artman says that artists draw better when they can physically control their model. 98% of all current reference dolls do not have the same flexibility as real people and 92% bend in ways that would not be humanly possible, making them bad references. Art Doll also has realistic body proportions for realistic drawings. Professional Human Body Jim says, “A large amount of drawings have body proportions that would not be humanly possible. This could be fixed if we had proper references.” Finally, Art Doll can be a replacement for a friend. Artist Psychologist Erin says, “A realistic doll can be an easy friend for artists who have no friends.” For
innovation could increase the girls’ pride with the doll because of the shared features and participation
In the history of Barbie we have seen doll in collaboration with the big fishes in the industry from exclusive collections for B to the legendary doll characterized as the káiser and characters of pop culture.
3. (1) Sales revenue: Based on Net Sales (line 25) of Exhibit 6, assuming Deductions come from purchase/early payment discounts or bad debt adjustments.
The second proposal, called Design Your Own Doll, is a new product line related to the heirloom line. It is one that will allow customers to customize the looks of the dolls they purchase through the New Heritage
One of the benefits of expanding the MMDC’ line is that the line has already demonstrated the commercial viability of the matching doll and child clothing model. The concept has a proven track record and now the company has only to further build on this successful model. Furthermore, the recent positive publicity engendered by the celebrity sightings, will create an even greater demand for the product, and will allow for the maintenance of premium pricing. We believe that the expanded line will be at least as profitable as the existing line.
There is many womens in the world that afortunetly can have babies or its dificult for them to have babie because they have blocked fallopian tubes so the sperm can’t meet the egg .Here is the BDD a doll that is like a human where you put the womens egg and the male sperm and the doll has a wound just like a normal women where the sperm can meet the egg and form the baby and having a normal dilivery. Now you dont have to worry about you not being able to be a mother here is the BDD better
Emily Harris should recommend the “Match My Doll Clothing Line Expansion” at New Heritage Doll Company’s upcoming capital budgeting industry. The Match My Doll project is a superior plan from both a financial and strategic perspective. In order to remain a durable franchise, NHDC’s focus is to continue strengthening its product line and driving future growth, and the Match My Doll project enables this.
Project 1 2 Initial cost(£) 7000 7000 Expected earnings (years(£)) 5000 2000 1000 3500 3500 0
By 2009, New Heritage had grown to 450 employees and generated approximately $245 million of
360-6, which has a cost of $360,000, a 6-year life, and aftertax cash flows of $98,300 per year. Assume both projects
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.
A more accurate measure for considering whether or not to accept a project is its net present value. It is not without flaw, as any deviation from forecasted amounts will alter the NPV. NPV assumes that cash flows generated from the project are reinvested at the company's required rate of return, rather than the IRR. This provides a more realistic measure of how a project will affect the firm while providing a dollar amount, rather than an unreliable percentage. In comparing the evaluation methods, we feel NPV is the most appropriate for this case.
Mutually exclusive projects are another situation for which NPV must extend its approach. In such projects, the chosen project is usually one which results in the greatest positive NPV because this will produce the greatest addition to shareholders’ wealth. In the case of mutually exclusive investments, ranking becomes crucial as only