Compute the payback period and profitability index

Assignment Help Corporate Finance

Reference no: EM131642368

Corporate Financial Management Assessment - Case study

Case Study - New Heritage Doll Company: Capital Budgeting

Overview: You are acting as the CEO of New Heritage Doll company, and you need to decide which investment projects can create value for shareholders' wealth. Your task is to evaluate proposed projects using the financial and qualitative information provided and to select a project to be approved for a given year's investment plan using any evaluation criteria you deem appropriate.

The Case Study is a real-world case study, and one thing can, and perhaps should do, is to consider the analysis using different strategies. In this way, you may try different strategies in order to develop a deeper understanding of how different decisions lead to different outcomes.

Report requirements: Based on the case study, please answer all of the following questions in your report:

1. Using the financial and qualitative information provided in the case, estimate the free cash flow (FCF) of each project from 2010 to 2020.

2. If the growth rate of the free cash flow after 2020 is 3% for both projects, what is the terminal value of Match My Doll Clothing Line Expansion project and what is the terminal value of Design Your Own Doll project?

3. How do you determine the riskiness of the two projects you evaluated? Based on the riskiness of each project, what discount rates are you going to use to compute the net present value?

4. The depreciation is a non-cash charge. Do you need to consider the depreciation in the capital budgeting process? Why? Explain.

5. Use the financial and qualitative information provided, compute the net present value (NPV) for each project?

6. Compute the payback period and profitability index for each project.

7. If you are forced to recommend one project over the other (the two projects are maturely exclusive projects), which one you will choose? Why?

8. What isyour budget constraint and how does it impact your decision?

Formatting instructions: You are encouraged to write your final report in a formal business format for 5-10 pages long with 1.5 lines spacing, 12pt font, and 2.54cm margins.

Attachment:- Assignment Files.rar

Reference no: EM131642368

Questions Cloud

How ei differ from traditional conceptions of intelligence : How does EI differ from traditional conceptions of intelligence? What was the impact of this manager(s) on your motivation, productivity, and job satisfaction?

What are the different type of plasias : What are the different type of plasias that you have read about. Please give examples. What does this tell the provider

Determining the performance rating : The performance rating was 93 percent, and workday allowances are 14 percent. Determine each of the following:

Discuss endoscopy that reveals several peptic ulcers : endoscopy that reveals several peptic ulcers.Treatment of the ulcers include antibiotics,proton pump inhibitors, and bismuth salts

Compute the payback period and profitability index : FNCE5010 Corporate Financial Management Assessment - Case study. Compute the payback period and profitability index for each project

Performance appraisal process : From the first e-Activity, explore the major issues inherent within the performance appraisal process that may lead to any type of discrimination

Environmental and gender politics challenge : How have states attempted to solve the problems of underdevelopment and what are some of the failings of development strategies so far?

Write a paper on the selected issue or research problem : Select a clinical issue or problem and a potential solution. Write a 500-word paper on the selected issue or research problem and potential solution.

Define erp and best-of-breed wms : Define ERP and best-of-breed WMS. What are the main differences between the two types of software solutions? How are they similar?

Reviews

len1642368

9/14/2017 7:54:37 AM

IMPORTANT INSTRUCTIONS: This assessment is due by above date and time. Show all working to demonstrate you have understood how to solve each problem. If you use a financial calculator, state the sequence of steps to solve the problem. Students are to submit their assignments onto Blackboard. The assignment must be typed (Word or PDF). The answer must be legible. If the marker cannot follow or read your answers, marks cannot be rewarded. Answer all sections.

9/14/2017 7:54:28 AM

Formatting instructions: You are encouraged to write your final report in a formal business format for 5-10 pages long with 1.5 lines spacing, 12pt font, and 2.54cm margins. Please see the Rubric marking guide for the Case Study in the assessment folder “Assessment 3: Individual Case Study 35%”.

Write a Review

Required(*) Message

User Account

All Pages