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Write a report on which project should Harris recommend or neither. In your report, you need to include quantitative analysis, including NPV, IRR, Payback and

Write a report on which project should Harris recommend or neither. In your report, you need to include quantitative analysis, including NPV, IRR, Payback and sensitivity analysis. You also need to include qualitative analysis including risk factors, long term impact of the project on the overall business, growth potentials, etc.

In Module7Lecture.xlsx, I have finished cash flows, NPV, IRR and Payback under three different scenarios. Finish cash flow forecasting on the second project and calculating NPV, IRR and Payback for three scenarios as well. A sensitivity analysis parameters have been created for the first project. Please use the same parameters to construct sensitivity analysis for both projects. Write the report using the following template named Module7Template.docx.

Module7Lecture.xlsx

New Heritage Doll Company: Capital Budgeting










Exhibit 1Selected Operating Projections for Match My Doll Clothing Line Expansion

























20102011201220132014201520162017201820192020
Revenue


4,5006,8608,4099,0829,80810,59311,44012,35513,34414,411

Revenue Growth


52.4%22.6%8.0%8.0%8.0%8.0%8.0%8.0%8.0%
Production Costs













Fixed Production Expense (excl depreciation)
575575587598610622635648660674
Variable Production Costs

2,0353,4044,2914,6695,0785,5216,0006,5197,0797,685
Depreciation


152152152152164178192207224242
Total Production Costs
02,7624,1315,0295,4195,8536,3216,8277,3737,9638,600
Selling, General & Administrative1,2501,1551,7352,1022,2702,4522,6482,8603,0893,3363,603
Total Operating Expenses
1,2503,9175,8667,1327,6908,3058,9699,68710,46211,29912,203
















Operating Profit

-1,2505839941,2771,3921,5031,6231,7531,8932,0452,209
















Working Capital Assumptions:












Minimum Cash Balance as % of Sales
3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%3.0%
Days Sales Outstanding

59.2x59.2x59.2x59.2x59.2x59.2x59.2x59.2x59.2x59.2x
Inventory Turnover (prod. cost/ending inv.)
7.7x8.3x12.7x12.7x12.7x12.7x12.7x12.7x12.7x12.7x
Days Payable Outstanding (based on tot. op. exp.)
30.8x30.9x31.0x31.0x31.0x31.0x31.0x31.0x31.0x31.0x
















Capital Expenditures
1,470952152152334361389421454491530
















Net Working Capital (NWC)












Cash



135206252272294318343371400432
Account Receivable

7291,1121,3631,4721,5901,7171,8552,0032,1632,336
Inventory


360500396427461498538581627677
Account Payable


3174845936406927478078719411016
Net Working Capital
8009071,3341,4181,5311,6531,7861,9292,0832,2502,429
Change in NWC

80010742784113122132143154167180-2,429














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