Monday, December 23, 2019

Corporate Finance - 1635 Words

Case 1 – New Heritage Doll Company 1. Set forth and compare the business cases for each of the two projections under consideration by Emily Harris. Which do you regard as more compelling? Productions was New Heritage ´s largest division as measured by total assets, and easily its most asset-Intensive. Approximately 75 % of the division ´s sales were made to the company ´s retailing division, with the remaining 25% comprising private label goods manufactured for other firms. The division revenue figures include approximately $95 million of internal sales within divisions which are eliminated when considering consolidated revenue for the company. We must look closer on the financial projections and the operating details for the two†¦show more content†¦In both cases the NPV is greater than zero but NPV of project 2 is greater than NPV of project 1, therefore project number 2 should be selected. | | | | | | | | | | | | NPV calculations for Design Your Own Doll | | | | | | | | | | | | | | | | | | | | | | | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | EBIT | -1201,00 | 0,00 | 550,00 | 1794,00 | 2724,00 | 2779,00 | 2946,00 | 3123,00 | 3310,00 | 3509,00 | 3719,00 | Tax @ 40% | -480,40 | 0,00 | 220,00 | 717,60 | 1089,60 | 1111,60 | 1178,40 | 1249,20 | 1324,00 | 1403,60 | 1487,60 | | | | | | | | | | | | | Net Income | -720,60 | 0,00 | 330,00 | 1076,40 | 1634,40 | 1667,40 | 1767,60 | 1873,80 | 1986,00 | 2105,40 | 2231,40 | plus: depreciation | 0,00 | 0,00 | 310,00 | 310,00 | 310,00 | 436,00 | 462,00 | 490,00 | 520,00 | 551,00 | 584,00 | less: ΆNWC | 0,00 | 1000,00 | 24,00 | 1386,00 | 942,00 | 202,00 | 213,00 | 226,00 | 240,00 | 254,00 | 269,00 | less: capital expenditures | 4610,00 | 0,00 | 310,00 | 310,00 | 2192,00 | 826,00 | 875,00 | 928,00 | 983,00 | 1043,00 | 1105,00 | | | | | | | | | | | | | Free Cash Flow (FCF) | -5330,60 | -1000,00 | 306,00 | -309,60 | -1189,60 | 1075,40 | 1141,60 | 1209,80 | 1283,00 | 1359,40 | 1441,40 | terminal value | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 27486,00 | FCFShow MoreRelatedCorporate Finance Notes1881 Words   |  8 PagesStudy notes By Zhipeng Yan Corporate Finance Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe Chapter 1 Introduction to Corporate Finance ..................................................................... 2 Chapter 2 Accounting Statements and Cash Flow.............................................................. 3 Chapter 3 Financial Markets and NPV: First Principles of Finance................................... 6 Chapter 4 Net Present Value....................................Read MoreNotes for Corporate Finance2082 Words   |  9 PagesCorporate Finance Notes * Chapter One: Introduce to Corporate Finance 1. Three Questions: A. What Long-term asset should be invested? Capital Budgeting B. How to raise cash for capital expenditures? Capital Structure C. How to manage short-term cash flow? Net Working Capital 2. Capital Structure: Marketing Value of Firm = MV of Debt + MV of Equity 3. Finance perspect and Accountant perspect: Finance: Cash Flow ! Accountant: A/R means profit ! 4. 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A corporations managements primary responsibility is to maximize the shareholders wealth which translates to stock price maximization. Corporate finance provides

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