New Heritage Doll Company: Capital Budgeting
1. Set forth and compare the business cases for each of the two projections under consideration by Emily Harris. Which do you regard as more compelling? 2. Use the operating projections for each project to compute a net present value for each. Which project creates more value? 3. Compute the internal rate of return and Payback period, payback index for each project. How should these metrics affect Harris’s deliberations? When and how would one use each of these(NPV, IRR, Payback) tools? 4. What additional information does Harris need to complete her analyses and compare the two projects? What specific questions should she ask each of the project sponsors? 5. If Harris is forced to recommend one project over the other, which should she recommend? Why?
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