Carlys Car Clinic

Step one:

Calculate NPV original investment for both north and south clinics. Use the 50/50 probability of flourish/flounder.

YOU NEED TO USE EXHIBIT ONE FOR ALL THE REQUIRED DATA

Both = 0.5(flourish $$ from both clinics) + 0.5(flounder $$ from both stores)

Step two:

Calculate the NPV of each clinic SEPARATELY. Use same formula as above

Step three:

Calculate the NPV of opening the North Shore clinic first and postponing the opening of the South Shore Clinic. Remember to include the $15,000 holding cost for postponing the opening.

North shore calculations

NPV = 0.5($ flourish) + 0.5($ flounder) initial investment North clinic

+ South shore calculations

+ 0.5(S. shore flourish initial investment) NUMERATOR

Divide by:

(1 +k) - $15,000

Step four:

Repeat Step three but calculate NPV for Opening South Shore Clinic first and postponing the opening of the North Shore Clinic.

Introduction outline what is occurring in the case study. Who are the protagonists? What is issue we need to evaluate?

NPV Calculations:

Opening both clinics simultaneously

Opening North Clinic and postponing opening South Clinic

Opening South Clinic and postponing opening North Clinic

SEE CALCULATION SHEET in Assignment Folder for more details

Conclusion

Evaluate all three options and a forth may be that the Helveys should just shelve this idea. Support your decision with both quantitative and qualitative reasoning.