Timing of the expected cash flows – stockholders of Clique Pens have higher preference for cash returns over 4-5 years rather than 10-15 years given the nature of the volatility in the industry.Ģ. Even though cash flow can be calculated based on the nature of the project, for the simplicity of the article we are assuming that all the expected cash flows are realized at the end of the year.ĭiscounted Cash Flow approaches provide a more objective basis for evaluating and selecting investment projects. There are four types of capital budgeting techniques that are widely used in the corporate world –Īpart from the Payback period method which is an additive method, rest of the methods are based on Scenario Planning given risks and management priorities.Ĭapital Budgeting Approaches Methods of Capital Budgeting
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How to use NPV number for project evaluation, and In this article we will cover - Different methods of capital budgeting In isolation the NPV number doesn't mean much but put in right context then it is one of the best method to evaluate project returns. The Net Present Value at 6% discount rate is 2644024 Cespedes, James Kindley Topic : Sales & Marketing Related Areas : Manufacturing, Marketing, Personnel policies, Sales Calculating Net Present Value (NPV) at 6% for Clique Pens: The Writing Implements Division of U.S. This case introduces basic elements of promotion and pricing policy and the challenges of marketing through major mass retailers. Along the way, Ferguson must consider the structure and problems of various trade promotions and the conflicting needs of her sales and marketing departments. She is now considering a move away from these discounts in favor of Market Development Funds (MDF), which would be used explicitly to promote retail merchandising activity for Clique and in theory provide the company with more control of trade promotional dollars to influence consumer behavior. Despite solid sales, division president Elise Ferguson has seen gross margins drop from 42% in 2010 to just over 36% in 2012 as a result of various discounts, allowances, and other off-invoice deals.
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Home is a manufacturer of a full line of pens, pencils, markers, and art supplies. The Clique Pens Writing Implements division of U.S. If a project’s NPV is greater than or equal to zero, the project should be accepted.Ĭase Description of Clique Pens: The Writing Implements Division of U.S. The net present value (NPV) of an investment proposal is the present value of the proposal’s net cash flows less the proposal’s initial cash outflow. It also touches upon business topics such as - Value proposition, Manufacturing, Marketing, Personnel policies, Sales. Home, Spanish Version (referred as “Clique Pens” from here on) case study provides evaluation & decision scenario in field of Sales & Marketing. The Clique Pens: The Writing Implements Division of U.S. Home, Spanish Version case study is a Harvard Business School (HBR) case study written by Frank V. Clique Pens: The Writing Implements Division of U.S.
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Home, Spanish Version case studyĪt Oak Spring University, we provide corporate level professional Net Present Value (NPV) case study solution.
NPV solution for Clique Pens: The Writing Implements Division of U.S.
Introduction to Net Present Value (NPV) - What is Net Present Value (NPV) ? How it impacts financial decisions regarding project management?
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