Write a report on which project should Harris recommend or neither. In your report, you need to

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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 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 1		Selected Operating Projections for Match My Doll Clothing Line Expansion

			2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Revenue				4,500	6,860	8,409	9,082	9,808	10,593	11,440	12,355	13,344	14,411
	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)				575	575	587	598	610	622	635	648	660	674
Variable Production Costs				2,035	3,404	4,291	4,669	5,078	5,521	6,000	6,519	7,079	7,685
Depreciation				152	152	152	152	164	178	192	207	224	242
Total Production Costs			0	2,762	4,131	5,029	5,419	5,853	6,321	6,827	7,373	7,963	8,600
Selling, General & Administrative			1,250	1,155	1,735	2,102	2,270	2,452	2,648	2,860	3,089	3,336	3,603
Total Operating Expenses			1,250	3,917	5,866	7,132	7,690	8,305	8,969	9,687	10,462	11,299	12,203

Operating Profit			-1,250	583	994	1,277	1,392	1,503	1,623	1,753	1,893	2,045	2,209

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				59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x
Inventory Turnover (prod. cost/ending inv.)				7.7x	8.3x	12.7x	12.7x	12.7x	12.7x	12.7x	12.7x	12.7x	12.7x
Days Payable Outstanding (based on tot. op. exp.)				30.8x	30.9x	31.0x	31.0x	31.0x	31.0x	31.0x	31.0x	31.0x	31.0x

Capital Expenditures			1,470	952	152	152	334	361	389	421	454	491	530

Net Working Capital (NWC)
Cash				135	206	252	272	294	318	343	371	400	432
Account Receivable				729	1,112	1,363	1,472	1,590	1,717	1,855	2,003	2,163	2,336
Inventory				360	500	396	427	461	498	538	581	627	677
Account Payable				317	484	593	640	692	747	807	871	941	1016
Net Working Capital			800	907	1,334	1,418	1,531	1,653	1,786	1,929	2,083	2,250	2,429
Change in NWC			800	107	427	84	113	122	132	143	154	167	180	-2,429