Essay about Hansson Private Label

1338 Words Dec 2nd, 2013 6 Pages
Case Study: Expansion and Risk at Hansson Private Label, Inc.: Evaluating Investment in the Goliath Facility Final Project by Rodrigo Montechiari Company´s Business Operations, Strategy and Past Performance HPL is a manufacturer of personal care products for retail partners. Its strategy has always been to focus on efficiency, cost control and customer relation to guarantee solid revenue grows until 2007. Expansions have always been carefully analyzed and the Company never worked below 60% capacity utilization. HPL has been able to grow its revenues to $ 681 million in 2007 accounting for 28% of national consumption but the Company is working close to maximum capacity. On the other way, its performance on units sold is growing only at 1% …show more content…
O the same way, the associated Internal Rate of Return is 12.94%.

NPV Sensitivity to Price Variations A sensitive analysis to changes in prices was performed to assess the projects sensibility to price fluctuations. At an initial selling price of $ 1.90 per unit, the projected cash flow would be the following:
At $1.90 Net Operating Income Before Tax Net Operating Income Future Value of OCF Present Value of OCF Current 2009 $10.512 $6.307 ($3.970) ($3.630) 2010 $13.296 $7.977 $10.359 $8.658 2011 $15.298 $9.179 $11.585 $8.853 2012 $17.741 $10.645 $12.959 $9.054 2013 $19.929 $11.957 $14.244 $9.098

($45.000) ($45.000)

At $1.90 Net Operating Income Before Tax Net Operating Income Future Value of OCF Present Value of OCF

2014 $22.586 $13.551 $15.740 $9.192

2015 $23.253 $13.952 $17.485 $9.335

2016 $23.928 $14.357 $17.881 $8.728

2017 $24.612 $14.767 $18.283 $8.159

2018 $25.304 $15.182 $43.310 $17.671

It is worth notice that final WC in 2018 has been added to Future Value of OCF.

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