suppose if the sales of the company increase by 10%, what is the NPV of all the
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Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Investment ($000) $23,000 $119,300 $13,000 $23,900 $17,000 Economic Analysis Summary of Project Proposals Net Present Value* Base Case NPV ($000) $16,800 $25,900 $20,500 $300 $15,700 10% Sales Decline Impact on NPV ($000) ($4,722) ($16,611) ($4,066) ($4,073) ($7,854) IRR 12.3% 9.8% 16.4% 8.1% 10.8% * NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows. **Trade area is the geographical area from which 70% of store sales will be realized. Population 70,000 632,000 151,000 222,000 N/A Trade Area** Population Increase 2000-2005 27% 3% 3% 16% N/A Median Income $56,400 $48,500 $38,200 $56,000 $65,931 % Adults 4+ yrs. college 12% 45% 17% 24% 42% Gopher Place was a request for $23.0 million to build a P04 store scheduled to open in October 2007. The prototype NPV would be achieved with sales of 5.3% below the R&P forecast level. This market was considered an important one, with five existing stores already in the area. Wal-Mart was expected to add two new supercenters in response to favorable population growth in the trade area, which was considered to have a very favorable median household income and growth rate. Because of the high density of Target stores, nearly 19% of sales included in the forecasts were expected to come from existing Target stores Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Investment ($000) $23,000 $119,300 $13,000 $23,900 $17,000 Economic Analysis Summary of Project Proposals Net Present Value* Base Case NPV ($000) $16,800 $25,900 $20,500 $300 $15,700 10% Sales Decline Impact on NPV ($000) ($4,722) ($16,611) ($4,066) ($4,073) ($7,854) IRR 12.3% 9.8% 16.4% 8.1% 10.8% * NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows. **Trade area is the geographical area from which 70% of store sales will be realized. Population 70,000 632,000 151,000 222,000 N/A Trade Area** Population Increase 2000-2005 27% 3% 3% 16% N/A Median Income $56,400 $48,500 $38,200 $56,000 $65,931 % Adults 4+ yrs. college 12% 45% 17% 24% 42% Gopher Place was a request for $23.0 million to build a P04 store scheduled to open in October 2007. The prototype NPV would be achieved with sales of 5.3% below the R&P forecast level. This market was considered an important one, with five existing stores already in the area. Wal-Mart was expected to add two new supercenters in response to favorable population growth in the trade area, which was considered to have a very favorable median household income and growth rate. Because of the high density of Target stores, nearly 19% of sales included in the forecasts were expected to come from existing Target stores
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Okay lets calculate the NPV of the five projects Gopher Place Whalen Court The Barn Goldies Square and Stadium Remodel if the companys sales increase ... View the full answer
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
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