Hansson Private Label

798 WordsMar 11, 20144 Pages
Hansson Private Label | ACF - I | 1. How would you describe HPL and its position within the private label personal care industry? HPL manufactures personal care products that are sold under the band label by other companies. The company has stable whole sales growth rate and has become successful by efficient manufacturing, good expense management and appropriate customer service. In the recent years, the company has been facing a great amount of competition in the private label industry. In conjunction with competition, the industry has been experiencing slow growth, with unit volume sales increasing less that 1% over the past four years. Even with those factors, the company has a solid foothold in the market; according to its…show more content…
Evaluate the NPV of the project under alternate terminal value assumptions. Using 9.44% WACC and assuming 1.3% terminal growth rate, NPV of the project = $452,196 5. Would you recommend that Tucker Hansson proceed with the investment? Tucker should invest in this project based on Gates’ projections with NPV above 450K and 84% IRR. If we assume a growth rate of 2% beyond year 2011 and COGS 30% of the revenue, we still get NPV of $383,920.4. Based on these calculations, we would recommend Tucker Hansson to invest in the project. 6. What additional sensitivity analysis would you conduct on the project value? Our sensitivity analysis adjusted the WACC upwards as well as the Terminal Growth Rate Upwards. Increasing the WACC demonstrates the changing effects. Even at 11.2% WACC this project is still profitable and should be
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