New Heritage Company

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NEW HERITAGE DOLL COMPANY
Capital Budgeting

NEW HERITAGE DOLL COMPANY
Capital Budgeting

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

To: CFO (New Heritage Doll Company)
From:
Date: 11/16/12
RE: NEW HERITAGE DOLL COMPANY

To: CFO (New Heritage Doll Company)
From:
Date: 11/16/12
RE: NEW HERITAGE DOLL COMPANY

Here a composite report is advanced on the toy industry, New Heritage Doll Company and the evaluation of its investment projects. Here a composite report is advanced on the toy industry, New Heritage Doll Company and the evaluation of its investment projects.

Index
Index

| | 1. Introduction| 4|
| | | |
 | | 2. The Doll Industry| 6|
| | | |
 | | 3. New Heritage Company| 9|
| | | |
 | | 4. Capital Budgeting| 11|
| | | |
 | | 5. Investment Proposals| 17|
| | | |
 | | 6. Projects analysis| 20|
| | | |
 | | 7. Election of one project| 26|
| | | |
 | | 8. Exhibit.1. Match My Doll Clothing| 32|
| | | |
 | | 9. Exhibit.2. Design Your Own Doll| 35|

1. Introduction

1. Introduction

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1.1 New Heritage Doll Company: Capital budget
In September 2010 Emily Harris was considering two proposals for investment for the company New Heritage Doll Company. As always, there are certain financial constraints that force the choice of a project and discard the other. The evaluation process for each project is hard, there are many details to consider, other data are not known with certainty and the only thing that can be done is an estimate as closely as possible.

Our role here is to help interpret information, work with it, develop surveys and help clarify the dilemma so that the end result is the choice of the most suitable investment project for New Heritage Doll Company.

Sport toys
Sport toys

2. The doll industry

2. The doll industry

New Heritage has created a durable franchise for its line of heirloom dolls. New Heritage has created a durable franchise for its line of heirloom dolls.

Revenue in the toy industry in the United States were 42 billion in 2008 and is expected to grow 4.6% per year to reach 52.5 billion in 2013 (graph 1). The market is divided into two broad segments: video games (48%) and traditional toys and games (52%) (Figure 2). The second segment is further divided into preschool toys (14.5%), wrist (14.1%), sports toys (12.3%) and other toys and games (59.1%) (Figure 3).

Figure 2
Figure 2

Toys segments
Toys segments
Figure 1
Figure 1

Sport toys
Sport toys

Figure 3
Figure 3

Traditional toys and games
Traditional toys and games

Preschool toys
Preschool toys
Sport toys

Sport toys

Other toys

Other toys

Dolls
Dolls
Sport toys
Sport toys
Sport toys
Sport toys

3. New Heritage Company

3. New Heritage Company

By the year 2009, New Heritage had grown to 450 employees and generated approximately $245 million of revenue and $27 million of operating profit.

By the year 2009, New Heritage had grown to 450 employees and generated approximately $245 million of revenue and $27 million of operating profit.

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3.1 New Heritage Dolls
The New Heritage Dolls Company was founded in 1985 by Ingrid Beckwith, a retired psychologist specializing in child development and the grandmother of two young girls.
Figure 4
Figure 4
It sought to extend the New Heritage brand and capitalize on high levels of customer loyalty by selectively licensing the company’s doll characters and themes to a variety of media that reached the firm’s target demographic of toddler to pre-teen girls.

New Heritage Dolls Production Division
New...
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