FIN 630 Milestone 2 project
In this second milestone assignment for the final project, you will continue your analysis of the New Heritage Doll Company case study. Assuming the role of Emily Harris, the firm’s financial analyst, your next step in the process is to perform the final calculations and explain the drawbacks and limitations of the six different methodologies. Why might some of these tools have more (or less) application to the capital budgeting decision for this company?
Note, however, that most companies generally evaluate the results of all six methodologies, determining the general direction of the overall findings. Each method has its strengths and weaknesses, and they must always be considered and weighed in a final report.
Prompt
To complete this second part of the final project, you must complete the remaining calculations (discounted cash flow, payback), being careful with the accuracy of your work. To do this, locate the necessary numbers from the case study and plug them into the second tab in the spreadsheet template you used for Milestone One. Document your results in the “Milestone Two” section of each specific project tab. This tab should include your discounted cash flow and payback calculations for each specific project. The module resources may also be useful.
Be sure to offer an explanation of the last methods (discounted cash flow, payback). Overall, you must explain the different methodologies/tools that can be applied for decision making (NPV, IRR, EBIT, discounted cash flow, and payback), and you must evaluate the drawbacks and limitations of each method in terms of its application to the decision at hand. Which methods have more (or less) application to the New Heritage Doll Company’s business/financial context? Which methods are most meaningful? Cite specific evidence from the case study and employ at least two scholarly articles to support your claims.
Note that the course textbook will also be useful as you progress through this project. As finance students and professionals, you are also encouraged to use your own experience, understanding, and knowledge of business and industry structure to drive your analysis.
Specifically, the following critical elements must be addressed:
Evaluation of Methodologies
Explain the different methods and tools available for evaluating capital budgeting options. Specifically, indicate their uses in different business contexts using specific examples.
Next, evaluate each of the methods in terms of its strengths and limitations for supporting sound, data-driven decision making. Cite specific evidence to support your claims.
Finally, identify which methods are the most meaningful for your particular organization and this case. Cite specific evidence to support your claims.
Analysis of the Capital Investment Options
Analyze each of the projects for its financial implications. Include your calculations and results for each of the following evaluation methods:
Discounted cash flow and payback
Be sure that all of your calculations are complete, accurate, and precise.
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