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# ChampSport Case Analysis

2021-12-30 来源: 51Due教员组 类别: Essay范文

各位留学生大家好！今天100Due教员组给大家分享的是一篇市场营销学essay代写范文，主要内容是讲：ChampSport Sporting Goods是一家生产和销售体育用品（包括许多体育运动的球拍）的公司，正在两个项目之间做出选择。副总统倡导的扩大网球馆的项目，净现值为910万美元，内部收益率为16%，风险较小。高级财务分析师坎波（Campo）希望引入合金棒球棒，因为它在许多方面都优于传统的木制棒球棒。为了说服副总裁，他计算出项目的净现值为8.33亿美元，内部收益率为38%。由于Campo的项目具有较高的净现值，因此该公司应承担该项目。

Executive Summary

ChampSport Sporting Goods, a firm that manufactures and sells sporting goods including rackets for many sports, is deciding between two projects. The project advocated by the vice president, to expand the tennis racket arena, has a NPV of $9.1 million and an IRR of 16% and is less risky. Campo, the senior financial analyst, wanted to introduce alloy baseball bat since it is better than the traditional wooden bat in many ways. To convince his vice president, he calculated the NPV of his project to be $83million and an IRR of 38%. Since Campo’s project has a higher NPV, the firm should undertake this project instead.

Introduction:

Campo, the senior financial analyst for ChampSport Sporting Goods, is deciding on whether he should introduce a new product. ChampSport manufactures sporting goods including rackets for many sports. The new product is an alloy bat for baseball. This product will have a larger sweet spot than the traditional wooden bat and will be less likely to break. The vice president of the firm suggested an alternative project to undertake with a NPV of $9.1 million and an IRR of 16% because it is less risky. Campo has to convince the vice president that his project is more rewarding.

The industry is dominated by a few large producers while the baseball bat segment has more than 25 major producers. The overall demand for metal bats is higher than the wooden bat these years due to its higher quality. ChampSport plans to differentiate itself from the competitors by focusing on solving the safety problem involved with baseball bats. In addition, due to the fact that alloy bats are lighter and easier to swing, and that they generate a higher exit speed for the ball, Campo predicts that there will be a high demand for this new product. Now Campo will use the NPV model to calculate whether this project is really profitable or not.

Analysis and Recommendations:

The NPV model is applied to an investment horizon from 2016 to 2023. Inputs from the case is presented in Exhibit 1. Sales figure is calculated using the sales price times the sales unit for 2016, then this figure is predicted to increase at a rate of 10% from then on every year. Variable cost is 70% of sales. Fixed cost is $12million every year. Depreciation calculation consisted of depreciation for both the building and the equipment. With a tax rate of 35%, the operating cash flow is shown in Exhibit 2. Exhibit 3 showed the changes in total capital and the free cash flow at the end. Land does not cost anything this year because it was bought before, and a $2.5 million salvage value is added at year 2023. The foregone tax shield generated by the endorsement is the endorsement amount $4.4 million times the tax rate. This amount is added back at the end of 2019. 60% of the cost of the building is deducted in 2016 and 40% of the cost is deducted in 2017. The cost of equipment is spread evenly between 2016 and 2017. The $1.875 million research and development cost and the $1.25 NLLA cost are both deducted in 2016. Working capital is 25% of this year’s sales figure minus the previous year’s sales. However, the sales figure for 2015 was not given and I used the sales of $480 million in 2014 as an approximation. The salvage value after tax is calculated by adding building, land and equipment all together and added to the last year. The result in Exhibit 3 showed a negative free cash flow in the first year and positive fee cash flow in subsequent years.

Since Campo doubts the beta for this firm found on Yahoo, I used the comparable company method to calculate Campo’s beta. Shown in Exhibit 4, I first unlevered all of the betas for the competitors using their tax rate and debt to equity figures. Then, taking the average of the unlevered betas for the competitors, I re-levered the ChampSport’s beta using the Hamada Equation and ChampSport’s own tax rate and debt to equity figures. The beta calculated using this method is 1.008.

The sensitivity analysis is performed on number of units sold, sales growth rate, and the discount rate. I calculated what would happen to the NPV if the sales unit went up or down by 3%. Changing the sales growth rate from 8% to 12% gave the sensitivity analysis for the sales growth rate. For the discount rate, instead of using the current 9%, I calculated the NPV for 7% to 11%. As shown in Exhibit 5, I will add the result here once I get the numbers correct.

Conclusion:

In conclusion, the NPV for the alloy baseball bat project proposed by Campo is positive and the IRR exceeds the cost of capital. What is more, the NPV for this project exceeds the NPV for the project put forward by the vice president. When the firm has the capability of only undertaking one project, we should take the project with the higher NPV.

51due留学教育原创版权郑重声明：原创优秀代写范文源自编辑创作，未经官方许可，网站谢绝转载。对于侵权行为，未经同意的情况下，51Due有权追究法律责任。主要业务有essay代写、assignment代写、paper代写、作业代写、论文代写服务。

51due为留学生提供最好的论文代写服务，亲们可以进入主页了解和获取更多代写范文提供论文代写服务，详情可以咨询我们的客服QQ：800020041。

Executive Summary

ChampSport Sporting Goods, a firm that manufactures and sells sporting goods including rackets for many sports, is deciding between two projects. The project advocated by the vice president, to expand the tennis racket arena, has a NPV of $9.1 million and an IRR of 16% and is less risky. Campo, the senior financial analyst, wanted to introduce alloy baseball bat since it is better than the traditional wooden bat in many ways. To convince his vice president, he calculated the NPV of his project to be $83million and an IRR of 38%. Since Campo’s project has a higher NPV, the firm should undertake this project instead.

Introduction:

Campo, the senior financial analyst for ChampSport Sporting Goods, is deciding on whether he should introduce a new product. ChampSport manufactures sporting goods including rackets for many sports. The new product is an alloy bat for baseball. This product will have a larger sweet spot than the traditional wooden bat and will be less likely to break. The vice president of the firm suggested an alternative project to undertake with a NPV of $9.1 million and an IRR of 16% because it is less risky. Campo has to convince the vice president that his project is more rewarding.

The industry is dominated by a few large producers while the baseball bat segment has more than 25 major producers. The overall demand for metal bats is higher than the wooden bat these years due to its higher quality. ChampSport plans to differentiate itself from the competitors by focusing on solving the safety problem involved with baseball bats. In addition, due to the fact that alloy bats are lighter and easier to swing, and that they generate a higher exit speed for the ball, Campo predicts that there will be a high demand for this new product. Now Campo will use the NPV model to calculate whether this project is really profitable or not.

Analysis and Recommendations:

The NPV model is applied to an investment horizon from 2016 to 2023. Inputs from the case is presented in Exhibit 1. Sales figure is calculated using the sales price times the sales unit for 2016, then this figure is predicted to increase at a rate of 10% from then on every year. Variable cost is 70% of sales. Fixed cost is $12million every year. Depreciation calculation consisted of depreciation for both the building and the equipment. With a tax rate of 35%, the operating cash flow is shown in Exhibit 2. Exhibit 3 showed the changes in total capital and the free cash flow at the end. Land does not cost anything this year because it was bought before, and a $2.5 million salvage value is added at year 2023. The foregone tax shield generated by the endorsement is the endorsement amount $4.4 million times the tax rate. This amount is added back at the end of 2019. 60% of the cost of the building is deducted in 2016 and 40% of the cost is deducted in 2017. The cost of equipment is spread evenly between 2016 and 2017. The $1.875 million research and development cost and the $1.25 NLLA cost are both deducted in 2016. Working capital is 25% of this year’s sales figure minus the previous year’s sales. However, the sales figure for 2015 was not given and I used the sales of $480 million in 2014 as an approximation. The salvage value after tax is calculated by adding building, land and equipment all together and added to the last year. The result in Exhibit 3 showed a negative free cash flow in the first year and positive fee cash flow in subsequent years.

Since Campo doubts the beta for this firm found on Yahoo, I used the comparable company method to calculate Campo’s beta. Shown in Exhibit 4, I first unlevered all of the betas for the competitors using their tax rate and debt to equity figures. Then, taking the average of the unlevered betas for the competitors, I re-levered the ChampSport’s beta using the Hamada Equation and ChampSport’s own tax rate and debt to equity figures. The beta calculated using this method is 1.008.

The sensitivity analysis is performed on number of units sold, sales growth rate, and the discount rate. I calculated what would happen to the NPV if the sales unit went up or down by 3%. Changing the sales growth rate from 8% to 12% gave the sensitivity analysis for the sales growth rate. For the discount rate, instead of using the current 9%, I calculated the NPV for 7% to 11%. As shown in Exhibit 5, I will add the result here once I get the numbers correct.

Conclusion:

In conclusion, the NPV for the alloy baseball bat project proposed by Campo is positive and the IRR exceeds the cost of capital. What is more, the NPV for this project exceeds the NPV for the project put forward by the vice president. When the firm has the capability of only undertaking one project, we should take the project with the higher NPV.

51due留学教育原创版权郑重声明：原创优秀代写范文源自编辑创作，未经官方许可，网站谢绝转载。对于侵权行为，未经同意的情况下，51Due有权追究法律责任。主要业务有essay代写、assignment代写、paper代写、作业代写、论文代写服务。

51due为留学生提供最好的论文代写服务，亲们可以进入主页了解和获取更多代写范文提供论文代写服务，详情可以咨询我们的客服QQ：800020041。