This website uses cookies to ensure you have the best experience. Learn more

Finance 316 Case Essay

673 words - 3 pages

Capital Budgeting Case

The Gillette Company is a globally company which focuses in male grooming products. In order to maintain Gillette Company’s market leadership, the company recently has introduced Excel and MACH3 these two new products into the market.  Compared the analysis of income statements of Excel and the combination of MACH3 and Excel, we found out that the Gillette Company should go forward with the development of the MACH3 shaving system because we found the net present value of the combination of MACH3 and Excel is higher than the net present value of Excel system.
Through the information, we found out that the sales of MACH3 during 2009~2014. “Gillette’s sales of the Excel line are expected to reach $1 billion per year by 2007 and to stabilize at that figure. However, the introduction of the MACH3 is expected to replace 8% of Excel’s sales”. Hence, we knew that the revenue of Excel is 92million [(1-8%)*1billion] in the ...view middle of the document...

After we looked through the profit, then we need to record the cash flow. It is the value of add up the depreciation and net profit. Thus, the total cash flow comes up with the values calculated from the front parts. Despite that, the discount rate is 0.077 which is quite important so the final discounted cash flow is being calculated with the formula ( =total cash flow* discount rate). The net present value is 225,428,896 dollars.
     Next, the product connected from above is the excel product. From the excel tables, the revenue is 1 billion for each year and expenses is 750 million each year. The pretax profit is equals to revenue minus expense. Because of the 35% tax, we can found out profit after tax(Pretax Profit * 35%). Cash flow = Net profit + Depreciation. Then we can find that discounted cash flow each year (Cash flow * Discount factor). Finally, we got the net present value, which is 75,075,000.
From all the above, we can found out that the net present value of MACH3 and Excel system is higher than the net present value of Excel. Therefor we can come up with the conclusion that the development of the MACH3 shaving system is necessary.
    In addition to thinking about and compare the net present value of these two systems, there still exists some other non-quantitative factors should be considered in decision-making. Firstly, since MACH3 has three blazes, which can make the product be felt more comfortable and closer to people’s faces. Secondly, this new product is improved and become safer. This is a very important element of a shaving product, so it can be a good point for customer to choose. Thirdly, this new product is easier to rinsing, this is a big improvement for the shaving product, so it can let the customers to use it more convenient. All in all, the MACH3 concept statement has been carefully developed to maximize consumer communication, product uniqueness and credibility, while minimizing confusion and skepticism. Therefor Gillette should go forward with the development of the MACH3 shaving system because it can help the company gain more profit and have a greater market share. It is a useful way to maintain its position as a flagship in this industry.

Other Papers Like Finance 316 Case

Assignment 4: Eastman Kodak

1517 words - 7 pages to be breached by the auditors would include ET Section 53 - Article II The Public Interest. I think it would be difficult in a high-risk case to reasonably assure the accuracy with the auditor’s presentation. Another one that I think would be easy to discredit an auditor from in a high risk case would be exercising due care. “ET Section 56 - Article V - Due Care- .01 The quest for excellence is the essence of due care. Due care requires a

Cost Accounting Case Study

2627 words - 11 pages total cost can be avoided if the increase in per unit cost of inputs can be judged based on market sentiment and availability of inputs. In such case the input can act as a key limiting factor if there is limited availability or when price becomes a constraint. For Raymond textiles, wool is the main raw material. Wool prices rose sharply during 2003 and were nearly 10% higher than the 20 year low reached in the previous year. In case this

Vancouver's 2010 Olympic Winter Games And Paralympic Games Bid

1679 words - 7 pages Winter Games Bid. Supported by Ottawa, the British Columbia provincial government, and the cities of Vancouver and Whistler, the Vancouver bid committee is spending thirty million dollars to finance the bid. The City of Vancouver, if awarded the bid, anticipates spending between two and six billion dollars in infrastructure improvement and revitalization costs (Menzies 16). New York City, competing with Moscow and Rome for the 2012 Olympic Games, may

Buisness Planning Executive Summary

3653 words - 15 pages offer limited outside ownership in Take Five on an equity, debt, or combination basis in order to facilitate a more rapid expansion of the Take Five concept. Mr. Smith holds an MBA in Finance from Anytown University. He has held executive level positions in finance with General Electric and Holiday Inn Worldwide. He is previously experienced in the restaurant industry, having opened Smith's Italian Restaurant in 1993, which still operates

Writing Arguments

5919 words - 24 pages . A 5-year increase in the minimum age for collecting Social Security benefits. d. An economy-wide expectation that a recession is over and that a robust expansion will occur. e. A substantial increase in household borrowing to finance auto purchases. Answer: (a) The consumption schedule will shift downward and the saving schedule will shift upward given the decrease in wealth. (b) The consumption schedule will shift upward and the saving

Tax Avoidance And Tax Evasion In Bangladesh

5263 words - 22 pages . pp.316-20 McGee, Robert W. (2006). “Ethics and Tax Evasion in Asia, AIB South East Regional Conference”, Bangkok, (7-9 December). Rashid, Mamun (2007). “Combating Financial Crimes in Bangladesh”, The Daily Star Business Vol.5, No. 1037, (May 03). Allingham, Michael G. and Agnar Sandmo (1972), Income tax evasion: A theoretical analysis, Journal of Public Economics 1, pp. 323-338. Buettner, T., and G. Wamser (2007), Intercompany Loans and Profit Shifting – Evidence from Company Level Data, CES ifo Working Paper No. 1959, 2007. Cobham, Alex (2005), Tax evasion, tax avoidance and development finance

Identity Theft

1950 words - 8 pages • Synthetic identity theft Identity theft can be used to make easy or finance crimes such like terrorism, illegal migration and espionage. Identity thieves normally seek to get noticed; they may do it just for fun, for the purpose of revenge or just to destroy the reputation of another person. On rare occasions, they may impersonate other people for other reasons, such as, to be praised or get noticed for the achievements of the victim. Criminal


2398 words - 10 pages -174 Chapter 8: Identifying Market Segments and Targets Week 3 TCOs C, H The Power of the Brand Chapter 9: Creating Brand Equity Chapter 11: Dealing with Competition Week 4 TCOs D, H Product Positioning and Strategy Chapter 12: Setting Product Strategy, pp. 316-333 Chapter 13: Designing and Managing Services Chapter 14: Developing Pricing Strategies and Programs Week 5 TCOs E, I Channel Management Chapter 15: Designing and

Basic Accounting Concept

4895 words - 20 pages Asian Journal of Case Research 7(1) 2014 ISSN 1985-4579 pp:1-16 FUNDING PROMOTIONAL ACTIVITIES: THE CASE OF JASMINE BEAUTY ENTERPRISE Wan Sharinee Fitri Wan Yahaya1, A.K Siti-Nabiha2, Fathyah Hashim3 ABSTRACT Established in 2008, Jasmine Beauty Enterprise (JBE) specialises in halal health and beauty products that it markets and sells in Malaysia. However, after four years of operation, the company’s founder, Jasmine, is still under

Prince2 - Project Management Team Roles

3577 words - 15 pages business benefits, and the project will complete within its agreed tolerances for budget and schedule. Business assurance covers:  validation and monitoring of the Business Case against external events and against project progress      keeping the project in line with Customer strategies monitoring project finance on behalf of the Customer monitoring the business risks to ensure that these are kept under control monitoring any Supplier and

Human Resource Accounting

5895 words - 24 pages focusing on the parts manufacturing division, with the possibility of pursuing the option of the mobile refrigeration business. However, in this case, the problem of the lack of funding might continue. 2. Corporate Restructuring and Management Buy-Out Shareholders The shareholders would benefit from either proposal two or three, as opposed to the first proposal, as they stand to gain some funds. The restructuring proposal requires them to pay

Related Essays

Value Tree Analysis

665 words - 3 pages ALGORITHM TO BUILD STATE TRANSITION DIAGRAM TREES FOR GENERATING TEST CASES - A CASE STUDY OF STATE-BASED TESTING', International Journal of Organizational Innovation, 3, 3, pp. 302-316. Howard, R, & Matheson, J 2005, 'Influence Diagrams', Decision Analysis, 2, 3, pp. 127-143. Zebda, A 2011, 'A NEW MODEL FOR SOLVING SYMMETRIC MULTI-LEVEL DECISION TREES', International Journal of Business, Accounting, & Finance, 5, 1, pp. 103-128.

Capital Budgeting Essay

560 words - 3 pages Capital Budgeting Case NPV or net present value illustrated as the present value of an investment’s annual free cash flow less the investment’s initial outlay (Keown, Petty, & Martin 2014 Pg. 314). While assessing both Corporation A and Corporation B, NPV formula’s represented by (present value of all the future annual free cash flows) - (the initial cash outlay). Calculations of Corporation A, has a 10% rate of return and the

Management Stategic Essay

1985 words - 8 pages Segmentation 299 B Does the Internet Make Market Segmentation Easier? 302 O Product Positioning 302 Finance/Accounting Issues 304 Acquiring Capital to Implement Strategies 305 B Projected Financial Statements 310 B Projected Financial Statement Analysis for Mattel, Inc. 312 0 Financial Budgets 315 S3 Evaluating the Worth of a Business 316 B Deciding Whether to Go Public 320 Research and Development (R&D) Issues 320 Management Information Systems

The Effectiveness Of Business Ethics In Education And Today’s Workplace

2556 words - 11 pages suggests that a company has either a corrupt culture or a defective selection process, or both.” (Zingales, Jul 16, 2012). In Madoffs case, the Ponzi scheme had been going on since the early 1990’s (Morrissey, Aug 11, 2009). Under the direction of Kenneth Lay, Enron- once one of the largest companies in America- collapsed in bankruptcy and ruined the lives of thousands of people (McLean & Elkind, May 18, 2006). The Chicago Tribune reported