Compare the business cases for each of the two projects under consideration by Emily Harris (qualitative analysis). Which one do you regard as more compelling?

New Heritage Doll Company Case Questions

1) Compare the business cases for each of the two projects under consideration by Emily Harris (qualitative analysis). Which one do you regard as more compelling?

2) Use the operating projections given in the case to compute an NPV for each project. Which project creates more value? (Note that you must choose a discount rate and terminal value growth rate for each project.)

3) Compute the IRR, Payback Period and Profitability Index for each project. How should these decision tools affect Harris’ decision? How do they compare to NPV as tools for evaluating projects?

4) What additional information would be helpful to Harris in her analysis? What specific questions should she ask each of the project sponsors?

5) If Harris is forced to choose only one project, which should she recommend? Why?

 
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