Hasson Private Label Case Answers

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Hasson Private Label Case 1. Hansson Private Label already has a 28% share of the private label personal care products. So they are a pretty big player in the industry. 2. In 2008 the FCF will be -57817 followed by -12378 in 2009. Then in 2010 the FCF will finally be positive at 5939. The free cash flow will slowly increase so that in 2018 the free cash flow will be 12783. The free cash flows for all the years will be included in a table in the appendix. We think that his projections are realistic for a variety of reasons. The first reason they only plan to generate an additional $84,960,000 in the first year which is only 2.124% of the current private label industry. Given Hansson Private Label’s current position in the…show more content…
At least one of the values used for these components is an estimate. This means that the WACC value will vary depending on the estimate. 4. We estimated the project net present value to be -$19,125,000 without tweaking any of the financial assumptions in the capital request form. So to make the net present value positive we would have to change something. We first started by adding 10% to the utilization for every year. This alone didn’t make a huge difference so we had to additionally lower the hourly wage to $18.19/hr. This gave us a net present value of about $35,000. This seems unreasonable or at the very least unfair to lower each worker’s hourly wage while increasing the workload. The second way we tried to get the net present value positive was by just decreasing the hourly wage of each employee from $20/hr to $16.02/hr. This gave us a net present value of about $33,000. This seems like a more reasonable solution, but it is dangerous because it could cause workers to quit. Therefore we wouldn’t recommend this project. Both solutions that lead to a positive net present value are too extreme and risky. Also this only leads to a positive net present value, not an extremely profitable one. This project shouldn’t be undertaken.

A few notes about the tables attached. They were created at the bottom of the spreadsheet given by the website then copied and pasted to a separate excel worksheet to be printed. The first table is the formulas we used in

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