New Heritage Doll Company Capital Budget PDF

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Caso practico de evaluación de proyecto, New Heritage Doll Company...

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New Heritage Doll Company: Capital Budgeting Teaching Note NPV Analysis for Match My Doll Clothing Line Extension TN Exhibit 1 2010 Revenue Revenue Growth

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

4,500

6,860

8,409

9,082

9,808

10,593

11,440

12,355

13,344

14,411

52.4%

22.6%

8.0%

8.0%

8.0%

8.0%

8.0%

8.0%

8.0%

NA

Production Costs Fixed Production Expense (excl depreciation) Variable Production Costs Depreciation Total Production Costs

0

575

575

587

598

610

622

635

648

660

674

2,035

3,404

4,291

4,669

5,078

5,521

6,000

6,519

7,079

7,685

0.4522

0.4962

0.5103

0.5141

0.5178

0.5212

0.5245

0.5276

0.5305

0.5332

152

152

152

152

164

178

192

207

224

242

2,762

4,131

5,029

5,419

5,853

6,321

6,827

7,373

7,963

8,600

Selling, General & Administrative

1,250

1,155

1,735

2,102

2,270

2,452

2,648

2,860

3,089

3,336

3,603

Total Operating Expenses

1,250

3,917

5,866

7,132

7,690

8,305

8,969

9,687

10,462

11,299

12,203

Operating Profit

583

994

1,277

1,392

1,503

1,623

1,753

1,893

2,045

2,209

Operating Profit/Sales

(1,250)

0.130

0.145

0.152

0.153

0.153

0.153

0.153

0.153

0.153

0.153

SG&A/Sales

0.257

0.253

0.250

0.250

0.250

0.250

0.250

0.250

0.250

0.250

3.0%

Working Capital Assumptions: Minimum Cash Balance as % of Sales

NA

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

Days Sales Outstanding

NA

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

Inventory Turnover (prod. cost/ending inv.)

NA

7.7x

8.3x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

0.0x

30.8x

30.9x

31.0x

31.0x

31.0x

31.0x

31.0x

31.0x

31.0x

31.0x

1,470

952

152

152

334

361

389

421

454

491

530

Days Payable Outstanding (based on tot. op. e Capital Expenditures Growth in capex Net Working Capital Accounts Cash Accounts Receivable Inventory Accounts Payable Net Working Capital NWC

-35.2% -84.0% 0.0% 119.3% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 0.2116 0.022187 0.0181 0.036756 0.036756 0.036752 0.036757 0.036754 0.036759 0.036756 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 135 206 252 272 294 318 343 371 400 432 729 1112 1363 1472 1590 1717 1855 2003 2163 2336 360 500 396 427 461 498 538 581 627 677 317 484 593 640 692 747 807 871 941 1016 800 907 1334 1418 1531 1653 1786 1929 2083 2250 2429 800 107 427 84 113 122 132 143 154 167 180

NWC/Sales

0.202

0.195

0.169

0.169

0.169

0.169

0.169

0.169

0.169

2011 350 152 (107) (952) (557)

2012 596 152 (427) (152) 169

2013 766 152 (84) (152) 682

2014 835 152 (113) (334) 541

2015 902 164 (122) (361) 583

2016 974 178 (132) (389) 630

2017 1,052 192 (143) (421) 680

2018 1,136 207 (154) (454) 735

2019 1,227 224 (167) (491) 793

0.169

NPV Analysis Free Cash Flows EBIT(1-t) plus depreciation less NWC less capital expenditures Free Cash Flow Terminal value

2010 (750) 0 (800) (1,470) (3,020) 3.00%

Initial Outlays Net working capital Net property, plant & equipment Discount factor Present value Net Present Value NPV without Terminal Value

2020 1,325 242 (180 (530) 857 16,345

(800) (1470)

8.40% $ $

1.0000 (3,020) 7,150 (146)

0.9225 (514)

0.8510 144

0.7851 536

0.7242 392

0.6681 390

0.6163 388

0.5686 387

0.5245 385

0.4839 384

0.4464 7679

2010 (3,020) 7.6%

2011 (557)

2012 169

2013 682

2014 541

2015 583

2016 630

2017 680

2018 735

2019 793

2020 17,202

2010 (3,020) (3,020)

2011 (557) (3,577)

2012 169 (3,408)

2013 682 (2,726)

2014 541 (2,185)

2015 583 (1,602)

2016 630 (972)

2017 680 (291)

2018 2019 735 793 443 7.40 years

2020 17,202

IRR Analysis Cash Flows IRR

Payback Analysis Cash flows Cumulative cash flow Payback period 5-year Cumulative EBITDA

$ 6,522

Profitability Index NPV/Initial Investment

1.35

New Heritage Doll Company: Capital Budgeting Teaching Note TN Exhibit 2 NPV Analyss for Design Your Own Doll 2010 Revenue

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

6,000

14,360

20,222

21,435

22,721

24,084

25,529

27,061

28,685

NA

139.3%

40.8%

6.0%

6.0%

6.0%

6.0%

6.0%

6.0%

1,650

1,683

1,717

1,751

1,786

1,822

1,858

1,895

1,933

13,833

16,712

Revenue Growth Production Costs Fixed Production Expense (excl depreciation)

0

Additional development costs (IT personnel)

435

Variable Production Costs

0

2,250

7,651

11,427

12,182

12,983

14,736

15,694

Depreciation

0

310

310

310

436

462

490

520

551

584

435

4,210

9,644

13,454

15,231

16,145

17,113

18,140

19,229

Total Production Costs

0

14,369

Selling, General & Administrative

1,201

0

1,240

2,922

4,044

4,287

4,544

4,817

5,106

5,412

5,737

Total Operating Expenses

1,201

435

5,450

12,566

17,498

18,656

19,775

20,962

22,219

23,553

24,966

Operating Profit

(1,201)

(435)

550

1,794

2,724

2,779

2,946

3,123

3,310

3,508

3,719

Operating Profit/Sales

0.092

0.125

0.135

0.130

0.130

0.130

0.130

0.130

0.130

SG&A/Sales

0.207

0.203

0.200

0.200

0.200

0.200

0.200

0.200

0.200

Working Capital Assumptions: Minimum Cash Balance as % of Sales

NA

NA

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

Days Sales Outstanding

NA

NA

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

Inventory Turnover (prod. cost/ending inv.)

NA

NA

12.2x

12.3x

12.6x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7

Days Payable Outstanding (based on tot. op. exp.)

NA

NA

33.7x

33.8x

33.9x

33.9x

33.9x

33.9x

33.9x

33.9x

33.9x

0

310

310

2,192

826

875

928

983

1,043

0%

608%

-62%

6%

6%

6%

6%

6%

0.052

0.022

0.108

0.039

0.039

0.039

0.039

0.039

0.039

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

180

431

607

643

682

723

766

812

861 4650

Capital Expenditures

4,610

Growth in capex Net Working Capital Accounts Cash

2010

1,105

Accounts Receivable

973

2328

3278

3475

3683

3904

4139

4387

Inventory

346

786

1065

1130

1197

1269

1345

1426

1512

Accounts Payable

474

1135

1598

1694

1796

1904

2018

2139

2267

2,410

3,352

3,553

3,766

3,992

4,232

4,486

4,755

202

213

226

240

254

Net Working Capital NWC NWC/Sales

1,000 1,000

1,024 24 0.171

1,386 0.168

942 0.166

0.166

0.166

0.166

0.166

0.166

269 0.166

NPV Analysis 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

(261)

330

1,077

1,634

1,667

1,767

1,874

1,986

2,105

2,231

0 (1,000)

310 (24)

310 (1,386)

Free Cash Flows EBIT(1-t)

(721)

plus depreciation less NWC less capital expenditures

(4,610)

Free Cash Flow

(5,331)

Terminal value

3.00%

Discount factor

9.00%

0 (1,261)

310 (942)

(310)

(310)

(2,192)

306

(309)

(1,190)

436 (202) (826) 1,076

462 (213) (875) 1,141

490 (226) (928) 1,210

520 (240)

551 (254)

584 (269

(983)

(1,043)

(1,10

1,283

1,359

1,44 24,737

Present value

1.000

0.9174

0.8417

0.7722

0.7084

0.6499

0.5963

0.5470

0.5019

0.4604

(5,331)

(1,157)

258

(239)

(843)

700

681

662

644

626

2010 (5,331) -0.5%

2011 (1,261)

2012 306

2013 (309)

2014 (1,190)

2015 1,076

2016 1,141

2017 1,210

2018 1,283

2019 1,359

2010 (5,331) (5,331)

2011 (1,261) (6,592)

2012 306 (6,286)

2013 (309) (6,595)

2014 (1,190) (7,784)

2015 1,076 (6,708)

2016 1,141 (5,566)

2017 1,210 (4,357)

2018 1,283 (3,074)

2019 2020 1,359 26,178 (1,715) 24,46 >10 years

Net Present Value

$

7,058

NPV without Terminal Value

$

(3,391)

0.422 11,058

IRR Analysis Cash Flows IRR

2020 26,17

Payback Analysis Cash flows Cumulative cash flow Payback period 5-year Cumulative EBITDA

$

Profitability Index NPV/Initial Investment

1.32

8,778

New Heritage Doll Company: Capital Budgeting Teaching Note TN Exhibit 3 NPV Sensitivity Analyses NPV of Match My Doll Clothing Line Extension

Discount rate 7.70% 8.40% 9.00%

$ $ $

0% 5,289 $ 4,408 $ 3,766 $

TV growth rate 1% 2% 6,141 $ 7,292 $ 5,075 $ 5,950 $ 4,314 $ 5,019 $

3% 8,932 7,150 5,958

NPV if TV=BV of NWC + PPE $ 3,011 $ 2,687 $ 2,425

3% 11,957 9,016 7,058

NPV if TV=BV of NWC + PPE $ 3,567 $ 2,980 $ 2,507

NPV of Design Your Own Doll

Discount rate 7.70% 8.40% 9.00%

$ $ $

0% 5,830 $ 4,404 $ 3,372 $

TV growth rate 1% 2% 7,263 $ 9,198 $ 5,526 $ 6,998 $ 4,294 $ 5,479 $...