New Heritage Doll Company Case Solution

New Heritage Doll Company Summary

Particulars NPV IRR PI Pay&a'( perio)

PV o- e.pli'it -ore'a/ting perio) PV o- terminal alue  otal  otal

MMDC 7,222 24!" 32% !%7

DYOD 7,063 MMDC #7 #7$" MMDC #32 MMDC $$$ DYOD

**DC

D+D

741

3,3731

7,2$6 7,222

#0,436 7,063

MMDC Moderate risk   a.  a. rate Di/'ount rate rowt rate a-ter #0 year/ Exhibit 1  +ear  +ear Reenue growt rate Reenue 5.pen/e/

40" RD an) *are(ting *are(ting 5.pen 8.40% 30" 20#0

20##

20#2 %240" 6,!%!

5.i&it # 5.i&it #

4,%00

5.i&it #

%7%

%7%

Varia&le pro)u'tion e.pen/e/ 5. 5 .i&it # Depre'iation 5.i&it #

2,03% #%2

3,404 # %2

2,762

4,#3#

#,#%%

#,73%

3,$#7

%,!66

?i.e) pro)u'tion e.pen/e/ e.'lu)ing )epre'iation

 otal  otal pro)u'tion pro)u'tion e.pen/e/ e.pen/e/ 8p-ront RD

8p-ront mar(eting S95  otal  otal operating operating e.pen/e/

Summation   Initial e.pen)iture e.pn/e) p%, para #, line #1   5.i&it #

0 62%

62%

Summation

#,2%0

5:I P9<5:I#=t1

Di;eren'e Derie)

#,2%01 7%01

%!3 3%0

$ $2 %$ %

Cape.

5.i&it #

#,470

$%2

#%2

*inimum 'a/ &alan'e a/ " /ale/ 5.i&it #

30"

30"

Day/ /ale/ out/tan)ing >

5.i&it #

%$2

%$2

Inentory turnoer >

5.i&it #

77

!3

Day/ paya&le/ out/tan)ing

5.i&it #

30!

30$

#3%

206

723 3%$ #,2#6

#,#0# 4$ ! #,!0%

 

 Assumptions about working capital 

Current a//et/ Ca/ 9''ount/ re'eia&le/ )ay/ Inentory  otal   otal 'urrent 'urrent a//et/ a//et/

MMDC Moderate risk   a.  a. rate Di/'ount rate rowt rate a-ter #0 year/ Exhibit 1  +ear  +ear Reenue growt rate Reenue 5.pen/e/

40" RD an) *are(ting *are(ting 5.pen 8.40% 30" 20#0

20##

20#2 %240" 6,!%!

5.i&it # 5.i&it #

4,%00

5.i&it #

%7%

%7%

Varia&le pro)u'tion e.pen/e/ 5. 5 .i&it # Depre'iation 5.i&it #

2,03% #%2

3,404 # %2

2,762

4,#3#

#,#%%

#,73%

3,$#7

%,!66

?i.e) pro)u'tion e.pen/e/ e.'lu)ing )epre'iation

 otal  otal pro)u'tion pro)u'tion e.pen/e/ e.pen/e/ 8p-ront RD

8p-ront mar(eting S95  otal  otal operating operating e.pen/e/

Summation   Initial e.pen)iture e.pn/e) p%, para #, line #1   5.i&it #

0 62%

62%

Summation

#,2%0

5:I P9<5:I#=t1

Di;eren'e Derie)

#,2%01 7%01

%!3 3%0

$ $2 %$ %

Cape.

5.i&it #

#,470

$%2

#%2

*inimum 'a/ &alan'e a/ " /ale/ 5.i&it #

30"

30"

Day/ /ale/ out/tan)ing >

5.i&it #

%$2

%$2

Inentory turnoer >

5.i&it #

77

!3

Day/ paya&le/ out/tan)ing

5.i&it #

30!

30$

#3%

206

723 3%$ #,2#6

#,#0# 4$ ! #,!0%

 

 Assumptions about working capital 

Current a//et/ Ca/ 9''ount/ re'eia&le/ )ay/ Inentory  otal   otal 'urrent 'urrent a//et/ a//et/

9''ount/ paya&le/

33#

4 $7

Net wor(ing 'apital In'rea/e in N@C

!!6 !!6

#,30! 422

2,220 2,22011

#,336 #,33611

#73

(!0" 2,2201 #000 (!0"   7,2%4 24!7"   327 !60

((1 1!##$" 3,%%61 0$23 (1!#"

2,220 2,22011

#,336 #,33611

#73

2,220 2,22011

#,232 #,23211

#47

?C?  erminal  erminal alue alue Total FCF Cumulatie total ?C? PV? &' NPV IRR PI Pay&a'( perio)

5.pli'it -ore'a/t perio) 'a/ Aow/ PV o- e.pli'ir -ore'a/ting perio)  erminal  erminal alue alue PV o- terminal alue  otal  otal PV

=

1# 3,3!31 0!%# 14

Initial Co/t C?C 7.5 Di;eren'e

iture/ to &e e.'lu)e)

20#3 2260" !,40!

20#4 !00" $,0!#

20#% !00" $,!07

20#6 !00" #0,%$2

20#7 !00" ##,43$

20#! !00" #2,3%4

20#$ !00" #3,342

2020 !00" #4,4#0

%!7

%$!

6#0

622

63%

64!

660

674

4,2$# #%2

4,66$ #%2

%,07! #64

%,%2# #7!

6,000 #$2

6,%#$ 207

7,07$ 224

7,6!% 242

%,030

%,4#$

%,!%2

6,32#

6,!27

7,374

7,$63

!,60#

2,#02

2,270

2,4%2

2,64!

2,!60

3,0!$

3,336

3,603

7,#32

7,6!$

!,304

!,$6$

$,6!7

#0,463

##,2$$

#2,204

#,276 766

#,3$2 !3%

#,%03 $02

#,623 $74

#,7%2 #,0%#

#,!$# #,#3%

2,043 #,226

2,206 #,323

#%2

334

36#

3!$

42#

4%4

4$#

%30

30"

30"

30"

30"

30"

30"

30"

30"

%$2

%$2 %$2

%$2

%$2

%$2

%$2

%$2

%$2

#27

#27

#27

#27

#27

#27

#27

#27

3#0

3#0

3#0

3#0

3#0

3#0

3#0

3#0

2%2

272

2$4

3#!

343

37#

400

432

#,3%0 3$6 #,$$!

#,4%! 427 2,#%7

#,%7% 46# 2,330

#,70# 4$! 2,%#6

#,!37 %3! 2,7#7

#,$!4 %!# 2,$3%

2,#42 627 3,#70

2,3#4 677 3,423

606

6%3

70%

762

!23

!!$

$60

#,037

#,3$3 !%

#,%04 ##2

#,624 #20

#,7%4 #30

#,!$% #40

2,046 #%2

2,2#0 #64

2,3!7 #77

6!#

%4#

%!4

633

6!2

736

7

%$$## $441 06#6 #)0

$8 2621 0%6$ #88

#$ 474 0%2% #8$

$81 2,7021 07!% #

41 2,#6#1 0724 #)

84 #,%761 066! #)1

) #,26$ 04!4 #8

!%$ #6,377 1!#$ #!,%0% 0446 !$)4

3,%%6 4,!2% #,26$

6!#

%4#

%!4

633

6!2

736

7

%$!%$

%3%

3$2

3$#

3$0

3!!

3!6

3!%

3!3 #6,377 7,3##

#470

!00

 otal

 

%61

 

7,3## 7,2%4

D+D *igh risk   a. rate Di/'ount rate

04 RD an) *are(ting 5.pen)iture/ to &e ).00%

rowt rate a-ter #0 year/ Exhibit   +ear Reenue growt rate " Reenue 5.pen/e/

30" 20#0

20##

=

BBB

6,000

20#3 #3$30" #4,3%!

?i.e) pro)u'tion e.pen/e/ e.'lu)ing )epre'iation

=

BBB

#,6%0

#,6!3

9))itional )eelopment e.pen/e

=

 4#

Varia&le pro)u'tion e.pen/e/ Depre'iation

= =

BBB BBB

2,2%0 3#0

7,6%# BBB

= !4# 360 =

43%

4,2#0

$,644

BBB

#,240

2,$22

#,20#

43%

%,4%0

#2,%66

#,20#1 72#1

43%1 26#1

%%0 330

#,7$2 #,07%

4,6#0

=

3#0

BBB

*inimum 'a/ &alan'e a/ " /ale/

30"

30"

Day/ /ale/ out/tan)ing Inentory turnoer

%$2 #22

BBB #23

Day/ paya&le/ out/tan)ing

337

33!

 otal pro)u'tion e.pen/e/ 8p-ront RD 8p-ront mar(eting S95

   

 otal operating e.pen/e/ 5:I P9 Cape.

 

20#2

=

BBB

9//umption/ a&out wor(ing 'apital

Current a//et/ Ca/

=

#!0

43#

9''ount/ re'eia&le/

=

$73

2,32$

Inentory  otal 'urrent a//et/ 9''ount/ paya&le/

= =

Net wor(ing 'apital In'rea/e in N@C

= =

?C?  erminal alue  otal ?C? Cumulatie total ?C? PV? PV NPV IRR PI Pay&a'( perio)

5.pli'it -ore'a/t perio) 'a/ Aow/ PV o- e.pli'ir -ore'a/ting perio)  erminal alue PV o- terminal alue  otal PV

 

 

34%

7!4

#,4$! %03

3,%44 #,#64

#,000 #,000

$$% %1

%,33#1

#,26#1

33%

3#01

%,33#1

#,26#1

33%

3#01

%,33#1 #000 %,33#1 7,063 #7$0" #32 $$$

6,%$21 0$#7 #,#%71

%,33#1

#,26#1

33%

3#01

%,33#1

#,#%71

2!2

23$1

6,2%71 0!42 2!2 Initial Co/t C?C Di;eren'e

2,3!0 #,3!%

6,%661 0772 23$1 !,#0# 32,%%0 24,4%0

 

e.'lu)e)

20#4 40!0" 20,2#6

20#% 600" 2#,42$

20#6 600" 22,7#%

20#7 600" 24,07!

20#! 600" 2%,%22

20#$ 600" 27,0%4

#,7#7

#,7%#

#,7!6

#,!22

#,!%!

#,!

%$=

BBB

=

=

=

=

##,427 3#0

#2,#!2 436

#2,$!3 462

#3,!33 4$0

#4,736 %20

#%,6$4 %%#

#3,4%4

#4,36$

#%,23#

#6,#4%

#7,##4

#!,#40

4,044

4,2!7

4,%44

4,!#7

%,#06

%,4#2

#7,4$!

#!,6%6

#$,77%

20,$62

22,220

23,%%2

2,7#! #,63#

2,773 #,664

2,$40 #,764

3,##6 #,!6$

3,302 #,$!#

3,%02 2,#0#

2,#$2

!26

!7%

$2!

$!3

#,043

30"

30"

30"

30"

30"

30"

%$2 #26

BBB #27

%$2 #27

%$2 #27

%$2 #27

%$2 #27

33$

BBB

33$

33$

33$

33$

606

643

6!#

722

766

!#2

3,27$

3,476

3,6!4

3,$0%

4,#40

4,3!!

#,06!

#,#3#

#,#$$

#,27#

#,34!

#,42!

4,$%3 #,62%

%,2%0 #,733

%,%6% #,!37

%,!$$ #,$47

6,2%3 2,064

6,62! 2,#!7

3,32! $4!

3,%#7 #!$

3,72! 2##

3,$%2 224

4,#!$ 237

4,440 2%#

#,#$$1

#,0!%

#,#40

#,20!

#,2!#

#,3%!

#,#$$1

#,0!%

#,#40

#,20!

#,2!#

#,3%!

7,7661 070! !%01

6,6!#1 06%0 70%

%,%4#1 0%$6 6!0

4,3331 0%47 66#

3,0%21 0%02 643

#,6$%1 0460 62%

#,#$$1

#,0!%

#,#40

#,20!

#,2!#

#,3%!

!%01

70%

6!0

66#

643

62%

 

2020 600" 2!,677

#,$33 = #6,7#2 %!4 #$,22$

%,737 24,$66  

3,7## 2,227 #,#0%

30"  

%$2 #27 33$

!60 4,6%#

46#0 #20#

 

#,%#4 7,026 2,3#$ 4,707 266 #,43$ 24,70% 26,#44

 

24,4%0 0422 ##,044

 otal  

#,43$

 

60! 24,70% #0,436

3,3731 #0,436 7,063

MMDC Moderate risk   a. rate Di/'ount rate rowt rate a-ter #0 year/ Exhibit 1  +ear Reenue growt rate Reenue 5.pen/e/

40" RD an) *are(ting 5.pen 8.40% 30" 20#0

20##

20#2 %240" 6,!%!

5.i&it # 5.i&it #

4,%00

5.i&it #

%7%

%7%

Varia&le pro)u'tion e.pen/e/ 5.i&it # Depre'iation 5.i&it #

2,03% #%2

3,404 #%2

2,762

4,#3#

#,#%%

#,73%

3,$#7

%,!66

?i.e) pro)u'tion e.pen/e/ e.'lu)ing )epre'iation

 otal pro)u'tion e.pen/e/ 8p-ront RD

8p-ront mar(eting S95  otal operating e.pen/e/

Summation   Initial e.pen)iture e.pn/e) p%, para #, line #1   5.i&it #

0 62%

62%

Summation

#,2%0

5:I P9<5:I#=t1

Di;eren'e Derie)

#,2%01 7%01

%!3 3%0

$$2 %

%$Cape.

5.i&it #

#,470

$%2

#%2

*inimum 'a/ &alan'e a/ " /ale/ 5.i&it #

30"

30"

Day/ /ale/ out/tan)ing >

5.i&it #

%$2

%$2

Inentory turnoer >

5.i&it #

77

!3

Day/ paya&le/ out/tan)ing

5.i&it #

30!

30$

#3%

206

730 3%$ #,224

#,##2 4$! #,!#6

 

 Assumptions about working capital 

Current a//et/ Ca/ 9''ount/ re'eia&le/ )ay/ Inentory  otal 'urrent a//et/

9''ount/ paya&le/

33#

4$7

Net wor(ing 'apital In'rea/e in N@C

!$3 !$3

#,3#$ 426

2,2201

#,3431

#6$

(!0" 2,2201 #000 (!0"   7,222 247$"   32% !%7

(1!#4#" 3,%631 0$23 (1!#)"

2,2201

#,3431

#6$

2,2201

#,23$1

#44

?C?  erminal alue Total FCF Cumulatie total ?C? PV? &' NPV IRR PI Pay&a'( perio)

5.pli'it -ore'a/t perio) 'a/ Aow/ PV o- e.pli'ir -ore'a/ting perio)  erminal alue PV o- terminal alue  otal PV

=

1$) 3,3$41 0!%# 144

Initial Co/t C?C 7.5 Di;eren'e

iture/ to &e e.'lu)e)

20#3 2260" !,40!

20#4 !00" $,0!#

20#% !00" $,!07

20#6 !00" #0,%$2

20#7 !00" ##,43$

20#! !00" #2,3%4

20#$ !00" #3,342

2020 !00" #4,4#0

%!7

%$!

6#0

622

63%

64!

660

674

4,2$# #%2

4,66$ #%2

%,07! #64

%,%2# #7!

6,000 #$2

6,%#$ 207

7,07$ 224

7,6!% 242

%,030

%,4#$

%,!%2

6,32#

6,!27

7,374

7,$63

!,60#

2,#02

2,270

2,4%2

2,64!

2,!60

3,0!$

3,336

3,603

7,#32

7,6!$

!,304

!,$6$

$,6!7

#0,463

##,2$$

#2,204

#,276 766

#,3$2 !3%

#,%03 $02

#,623 $74

#,7%2 #,0%#

#,!$# #,#3%

2,043 #,226

2,206 #,323

#%2

334

36#

3!$

42#

4%4

4$#

%30

30"

30"

30"

30"

30"

30"

30"

30"

%$2

%$2

%$2

%$2

%$2

%$2

%$2

%$2

#27

#27

#27

#27

#27

#27

#27

#27

3#0

3#0

3#0

3#0

3#0

3#0

3#0

3#0

2%2

272

2$4

3#!

343

37#

400

432

#,364 3$6 2,0#2

#,473 427 2,#72

#,%$# 46# 2,346

#,7#! 4$! 2,%33

#,!%% %3! 2,736

2,004 %!# 2,$%%

2,#64 627 3,#$#

2,337 677 3,447

606

6%3

70%

762

!23

!!$

$60

#,037

#,406 !7

#,%#$ ##3

#,640 #2#

#,772 #3#

#,$#3 #42

2,066 #%3

2,232 #6%

2,4#0 #7$

67!

%40

%!3

63#

6!0

73%

7$4

$#1 $6#1 06#6 #8)

$80 2!01 0%6$ #8

# 4%4 0%2% #8

$8 2,7#61 07!% ##

40 2,#7%1 0724 #)1

8# #,%$21 066! #)0

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20#2

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5.pli'it -ore'a/t perio) 'a/ Aow/ PV o- e.pli'ir -ore'a/ting perio)  erminal alue PV o- terminal alue  otal PV

 

 

34%

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5% #2766 77"

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42,000,000,000 Sare Vi)eo ame/ 04!  ra)itional oy/ an) ame/ 0%2 # CD

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200$ erall No o- 5mployee/ Reenue perating ProGt

4%0 24%,000,000 27,000,000 0##

Retailing Dii/ion Reenue perating ProGt

#$0,000,000 4,!00,000 003

Fi'en/ing Dii/ion Reenue perating ProGt

24,%00,000 #4,%00,000 0%$

Pro)u'tion Dii/ion Reenue perating ProGt

30,%00,000 7,700,000 02% 0!7

Capital :u)get 5:ID9

0#%

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0077 00!4 00$

Pro)u'tion Dii/ion

Reenue perating In'ome Doll Pri'e Range Fowe/t Hige/t Pro)u't/

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3 #2

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#%0,000 #60,000 #2%,000 43%,000