In doing his analysis, Mr. Barnes discovered that the appeal of baseball cards was not only in opening a wrapper and finding a favorite player enclosed but also that many baseball cards initially purchased for pennies had gained substantially in value. Once a player achieved star status, his rookie card (first issued) might greatly increase in worth. For example, the 1968 rookie card of Nolan Ryan was selling for $2000 in early 1993. The 1963 Pete Rose rookie card was valued at $800 and, finally, the first Topps card of Mickey Mantle issued in 1952 at 1 cent carried a trading value of $30000 four decades later. While the card manufacturer did not directly participate in this price appreciation, the hope for such gains in the future keeps youngsters and adults continually active in buying cards as they come out.
The sales for the set, which would be called Baseball Stars, would depend on the quality of the final product as well as the effectiveness of the promotional activities. There is also the danger of a number of errors when a set is initially issued. With approximately 750 cards in the set, there is the possibility of misquoting batting averages, misspelling names, and so on. When Fleer and Donruss introduced their new set in 1981, they were highly criticized by collectors for the numerous errors. Mr. Barnes hoped to avoid this fate for the Baseball Stars set by making heavy expenditures on quality control. He also intended to hire a number of employees from other card companies so he would have experienced people who could identify potential problems at a very early stage.
Over the years, Phelps Toy Company had developed a manual to evaluate capital budgeting projects. As a first step, Ike Barnes was required to predict anticipated sales over the next six years. While choice but to go along with company policy. He decided to project a range for potential sales in 1994 (the first year of business) and assign probabilities to the outcomes. The information is shown in Figure 2.
In doing his analysis, Mr. Barnes discovered that the appeal of baseball cards was not only in opening a wrapper and finding a favorite player enclosed but also that many baseball cards initially purchased for pennies had gained substantially in value. Once a player achieved star status, his rookie card (first issued) might greatly increase in worth. For example, the 1968 rookie card of Nolan Ryan was selling for $2000 in early 1993. The 1963 Pete Rose rookie card was valued at $800 and, finally, the first Topps card of Mickey Mantle issued in 1952 at 1 cent carried a trading value of $30000 four decades later. While the card manufacturer did not directly participate in this price appreciation, the hope for such gains in the future keeps youngsters and adults continually active in buying cards as they come out. The sales for the set, which would be called Baseball Stars, would depend on the quality of the final product as well as the effectiveness of the promotional activities. There is also the danger of a number of errors when a set is initially issued. With approximately 750 cards in the set, there is the possibility of misquoting batting averages, misspelling names, and so on. When Fleer and Donruss introduced their new set in 1981, they were highly criticized by collectors for the numerous errors. Mr. Barnes hoped to avoid this fate for the Baseball Stars set by making heavy expenditures on quality control. He also intended to hire a number of employees from other card companies so he would have experienced people who could identify potential problems at a very early stage.Over the years, Phelps Toy Company had developed a manual to evaluate capital budgeting projects. As a first step, Ike Barnes was required to predict anticipated sales over the next six years. While choice but to go along with company policy. He decided to project a range for potential sales in 1994 (the first year of business) and assign probabilities to the outcomes. The information is shown in Figure 2.
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