New Heritage

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The New Heritage Doll Company is founded in 1985 and has long history. The management of company pay attention to the doll developing girls’ the imagination and self-image. The company tends to create some new products to dominate the market. The U.S. retail sales of dolls totaled $3.1 billion in 2008 while the New Heritage Doll Company’s revenue approximately $245 million of revenue, owning less than 10% of market share. There is good reason to believe that the New Heritage Doll Company has a potential future. Based on this assumption, we assume the New Heritage Doll Company’s g (internal growth rate) is not less than 3%(average growth of U.S. dolls market). The data total case flow of 2021 in Exhibit 1, Exhibit 2 we provided are base on…show more content…
If the time value is involved the Discounted Payback is longer. What’s more the, the cash flow occupied of project Design Your own Doll will increase to 7,501 by the fifth year, 3 million more than that of project Match My Doll Clothing by the second year. It means the company need more capital prepares for this project. risk The NPVs above are calculated base on the assumption of medium-risk. When the economic situation is not good and the risk is high, the discount rate will increase to 9%. * Match My Doll Clothing PV2021=859×1+gk-g=859×1+3%9%-3%=14,745 NPV=5,473 decrease by 17.3%. * Design Your own Doll PV2021=1,444×1+gk-g=1,444×1+3%9%-3%=24,786 NPV=6,488 decrease by 22.4%. On the contrary, when the situation is good, we assume that discount rate=7.7%. The result will be changed. * Match My Doll Clothing PV2021=859×1+gk-g=859×1+3%7.7%-3%=18,824 NPV=8,327 decrease by 25.9%. * Design Your own Doll PV2021=1,444×1+gk-g=1,444×1+3%7.7%-3%=31,642

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