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Write a report on which project Harris should recommend. In your report you need to include quantitative analysis including NPV, IRR and Payback. You need to include qualitative analysis including...

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Write a report on which project Harris should recommend. In your report you need to include quantitative analysis including NPV, IRR and Payback. You need to include qualitative analysis including long term impact of project on overall business, growth potential and risks.Cash flow for first project is attached. YOU NEED TO FINISH CASH FLOW FORECASTING FOR SECOND PROJECT AND CALCULATE NPV, IRR AND PAYBACK
Answered Same Day Jul 23, 2021

Solution

Neenisha answered on Jul 24 2021
124 Votes
Match My Line Clothing Line Expansion (MMDC) Business Line Proposal
This line had few matching dolls and clothing lines for child clothing. The manager was planning to expand this line which would cover all the seasons in the year.
Design Your Own Doll (DYOD) Business Line Proposal
The target customers for this project were the existing customer of New Heritage. This would increase the loyalty of the customers. Also this project provided the customers with an option to customize their dolls which was a unique option in itself. For these dolls the research showed that customers were willing to pay more and thus the company could charge the premium prices
With these options available the process of manufacturing was very complex which could pose high risk to business. This would also increase the expenses and overall cost of the company. The company was also required to make huge changes to it infrastructure and need to invest in the technological advancement. Most of the Research and Development expense was on upgradation of software, hardware and web design. This could pose huge risk to the company if the project fails as lot of cost is involved.
Calculation
MMDC
    NPV Analysis
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Free Cash Flows
    2010
    2011
    2012
    2013
    2014
    2015
    2016
    2017
    2018
    2019
    2020
    EBIT(1-t)
    -750
    350
    596
    766
    835
    902
    974
    1052
    1136
    1227
    1325
    plus depreciation
    152
    152
    152
    152
    164
    178
    192
    207
    224
    242
    less DNWC
    
    -107
    -427
    -84
    -113
    -122
    -132
    -143
    -154
    -167
    -180
    less capital expenditures
    -952
    -152
    -152
    -334
    -361
    -389
    -421
    -454
    -491
    -530
    Free Cash Flow
    -750
    -557
    169
    682
    541
    583
    630
    680
    735
    793
    857
    Terminal value
    3%
    
    
    
    
    
    
    
    
    
    16345
    Discount factor
    8.40%
    
    
    
    
    
    
    
    
    
    
    Net Present Value
    7150
     
     
     
     
     
     
     
     
     
     
    
    
    
    
    
    
    
    
    
    
    
    
    IRR...
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