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2. This problem is based on the following case problem: Puyallup Mall (PM) to decide what Jane Rodney. president of the Rodney Development Company, was
2. This problem is based on the following case problem: Puyallup Mall (PM) to decide what Jane Rodney. president of the Rodney Development Company, was trying types of stores to include in her new shopping center at Puyallup Mall. She had already contracted for a supermarket, a drugstore, and a few other stores that she considered essential. However, she had available an additional 20,000 square feet of floor space yet including the floor space required by each. Jane did not think she would have any trouble he lease agreements Jane used in her developments included two types of In addition, Jane was to receive a small percentage of the store's sales if the sale to allocate. She drew up a list of the 15 types of stores she might consider (see Table 1 finding occupants for any type of store payment. The store had to pay a certain annual rent, depending on the size and type of m each store is able. To estimate the profitability of each type of exceeded a specified minimum amount. The amount of annual rent fro store, Jane calculated the present value of all future rent and sales percentage payments. These are given in the third column. Jane wants to achieve the highest total present value over the set of stores she selects. However, she could not simply pick those stores with the highest present values, for there were several restrictions. that she has available only 20.000 square feet The first, of course, was In addition, a condition on the financing of the project required that the total annual rent should be at least as much as the annual fixed costs (taxes, management fees debt service, and so forth). These annual costs were $145.000 for this part of the project Finally, the total funds available for construction of this part of the project were $850.000, and eac h type of store required different construction costs depending on the size and type of store (fourth column in the table). In addition, Jane had certain requirements in terms of the mix of stores that she t. She wanted at least one store from each of the clothing, the hard goods, the miscellaneous groups, and the restaurant category. She wanted no more than tw from the restaurant category. Furthermore, the number of stores in the miscellaneous group should be equal to the total number of stores in the clothing and hard goods groups combined. Jane also thinks that if men's clothing store is chosen, the women's clothing store needs to be included. PRESENT CONSTRUCTIO VALUE N COST SIZE OF STORE ANNUAL (1.000s of Sa. Ft.)R F STORE RENT (S1,000s) ($1,000s) ( ($1,000s) 1.0 Men's omen's $4.4 6.1 S38.1 44.6 $24.6 32.0
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