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    Mihir Patel
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    The document presents operating projections for a new doll design business from 2010 to 2020. It shows projected revenue growth starting at $6,000 in 2012 and increasing annually by around 6% to over $28,000 by 2020. Total production costs are also projected, consisting of fixed production expenses, variable costs that increase with production, and annual depreciation expenses. Projected operating profits range from a loss of $1,201 in 2010 to a profit of over $3,700 by 2020. Key financial metrics like net present value, internal rate of return, payback period, and profitability index are positive, indicating the project would be profitable and financially viable under the given projections and assumptions.

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    The document presents operating projections for a new doll design business from 2010 to 2020. It shows projected revenue growth starting at $6,000 in 2012 and increasing annually by around 6% to over $28,000 by 2020. Total production costs are also projected, consisting of fixed production expenses, variable costs that increase with production, and annual depreciation expenses. Projected operating profits range from a loss of $1,201 in 2010 to a profit of over $3,700 by 2020. Key financial metrics like net present value, internal rate of return, payback period, and profitability index are positive, indicating the project would be profitable and financially viable under the given projections and assumptions.

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    © All Rights Reserved
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    12 views2 pages

    Finance Cal

    Uploaded by

    Mihir Patel
    The document presents operating projections for a new doll design business from 2010 to 2020. It shows projected revenue growth starting at $6,000 in 2012 and increasing annually by around 6% to over $28,000 by 2020. Total production costs are also projected, consisting of fixed production expenses, variable costs that increase with production, and annual depreciation expenses. Projected operating profits range from a loss of $1,201 in 2010 to a profit of over $3,700 by 2020. Key financial metrics like net present value, internal rate of return, payback period, and profitability index are positive, indicating the project would be profitable and financially viable under the given projections and assumptions.

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    © All Rights Reserved
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    of 2

    New Heritage Doll Company: Capital Budgeting

    Exhibit 2 Selected Operating Projections for Design Your Own Doll ($ in thousands)
    2010.00
    Revenue
    Revenue Growth
    Production Costs
    Fixed Production Expense (excl depreciation)
    Variable Production Costs
    Depreciation
    Total Production Costs
    Selling, General & Administrative
    Total Operating Expenses
    Operating Profit

    2011.00
    0.00

    2012.00
    6000.00

    2013.00 2014.00 2015.00 2016.00 2017.00 2018.00 2019.00


    14360.00 20221.60 21434.80 22720.90 24084.20 25529.30 27061.06
    1.39
    0.41
    0.06
    0.06
    0.06
    0.06
    0.06

    2020.00
    28684.70
    0.06

    1201.00
    1201.00

    0.00
    0.00
    0.00
    0.00
    0.00
    0.00

    1650.00
    2250.00
    309.70
    4209.70
    1240.00
    5449.70

    1683.00 1716.60 1750.90 1786.00 1821.70 1858.10 1895.30


    7651.00 11427.30 12181.60 12982.60 13833.00 14735.80 15694.30
    309.70
    309.70
    436.20
    462.40
    490.10
    519.50
    550.70
    9643.70 13453.60 14368.70 15231.00 16144.80 17113.40 18140.30
    2922.00 4044.30 4286.90 4544.10 4816.80 5105.80 5412.20
    12565.70 17497.90 18655.60 19775.10 20961.60 22219.20 23552.50

    1933.20
    16711.80
    583.80
    19228.80
    5736.90
    24965.70

    -1201.00

    0.00

    550.30

    1794.30

    2723.70

    2779.20

    2945.80

    3122.60

    3310.10

    3508.56

    3719.00

    0.03
    59.17
    12.18
    33.67

    0.03
    59.17
    12.27
    33.80

    0.03
    59.17
    12.63
    33.94

    0.03
    59.17
    12.72
    33.94

    0.03
    59.17
    12.72
    33.94

    0.03
    59.17
    12.72
    33.94

    0.03
    59.17
    12.72
    33.94

    0.03
    59.17
    12.72
    33.94

    0.03
    59.17
    12.72
    33.94

    309.70

    309.70

    2191.50

    825.70

    875.30

    927.80

    983.40

    1042.50

    1105.00

    2012
    2013
    180.00
    430.80
    972.66
    2327.89
    345.62
    785.96
    502.72
    1163.62
    995.57
    2381.03
    4.43
    -1385.47

    2014
    606.65
    3278.12
    1065.21
    1627.07
    3322.91
    -941.88

    2015
    643.04
    3474.79
    1129.61
    1734.72
    3512.73
    -189.82

    2016
    681.63
    3683.28
    1197.41
    1838.81
    3723.50
    -210.76

    2017
    722.53
    3904.28
    1269.25
    1949.14
    3946.91
    -223.41

    2018
    765.88
    4138.54
    1345.39
    2066.08
    4183.74
    -236.83

    2019
    811.83
    4386.86
    1426.12
    2190.06
    4434.75
    -251.02

    2020
    860.54
    4650.06
    1511.70
    2321.47
    4700.84
    -266.08

    2013
    1794.30
    717.72
    1076.58
    309.70

    2014
    2723.70
    1089.48
    1634.22
    309.70

    2015
    2779.20
    1111.68
    1667.52
    436.20

    2016
    2945.80
    1178.32
    1767.48
    462.40

    2017
    3122.60
    1249.04
    1873.56
    490.10

    2018
    3310.10
    1324.04
    1986.06
    519.50

    2019
    3508.56
    1403.42
    2105.14
    550.70

    2020
    3719.00
    1487.60
    2231.40
    583.80

    1386.28

    1943.92

    2103.72

    2229.88

    2363.66

    2505.56

    2655.84

    2815.20

    2012
    2013
    639.88
    1386.28
    4.43
    -1385.47
    -309.70
    -309.70
    0.00
    334.61
    -308.89

    2014
    1943.92
    -941.88
    -2191.50

    2015
    2103.72
    -189.82
    -825.70

    2016
    2229.88
    -210.76
    -875.30

    2017
    2363.66
    -223.41
    -927.80

    2018
    2505.56
    -236.83
    -983.40

    2019
    2655.84
    -251.02
    -1042.50

    2020
    2815.20
    -266.08
    -1105.00

    -1189.46

    1088.20

    1143.82

    1212.45

    1285.33

    1362.32

    1444.12
    2020
    23674.53
    25118.65
    23716.43

    Working Capital Assumptions:


    Minimum Cash Balance as % of Sales
    Days Sales Outstanding
    Inventory Turnover (prod. cost/ending inv.)
    Days Payable Outstanding (based on tot. op. exp.)
    Capital Expenditures

    Net Working Capital (NWC)


    Minimum Cash Balance
    Account Receivables
    Inventory
    Payables
    Total NWC
    Change in NWC

    4610.00

    2010

    0.00

    2011

    1000.00
    -1000.00

    Operating Cash Flow


    EBIT
    TAX (40% Corporate Tax)
    Earning after Tax
    Depreciation

    2010
    -1201.00

    2011
    0.00

    -1201.00

    0.00
    0.00

    2012
    550.30
    220.12
    330.18
    309.70

    Total Operating Cash Flow

    -1201.00

    0.00

    639.88

    Free Cash Flow (FCF)


    OCF
    Change in NWC
    Capital Expenditure
    Tax Benefit (40% of R&D and marketing)
    Total FCF

    2010
    -1201.00
    0.00
    -4610.00

    Terminal Value at High risk


    Cash flow after TV at high risk
    Net Cash Flow
    Project Growth Rate
    2.90%
    Risk Level
    High

    Rate
    9.00%

    Net Present Value


    High Risk
    6848.01
    Internal Rate of Return IRR
    High Risk
    17.83
    Payback Period
    High Risk
    10.06
    Profitability Index
    High Risk
    1.01

    -5811.00

    2011
    0.00
    -1000.00
    0.00
    480.40
    -519.60

    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    -5811.00

    -519.60
    -6330.60

    334.61
    -5995.99

    -308.89
    -6304.87

    -1189.46
    -7494.33

    1088.20
    -6406.13

    1143.82
    -5262.32

    1212.45
    -4049.87

    1285.33
    -2764.54

    1362.32
    -1402.22

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