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Case: A District Operator has asked you, a Financial Analyst, to assist with the following task. at Analysis: - The renovation is expected to cost
Case: A District Operator has asked you, a Financial Analyst, to assist with the following task. at Analysis: - The renovation is expected to cost $750K and will have a useful life of 10 years. - Total store retail sales (excluding the produce department) are expected to increase by 2% annually, with Retail Trading Margin rates remaining consistent with Year 0. - As a result of the expansion, produce department sales are expected to grow by 5% in the first two years, and 3% thereafter. Retail Trading Margin rates are expected to remain consistent with Year 0. - Shrink rates are expected to remain consistent for the rest of the store, but in the produce department the shrink rate is expected to decrease to 10% after the renovations - Wholesale \& Other Margin is expected to remain consistent (as a % of total sales) with Year 0. - Consider store labour and Other expenses fixed, but with inflation of 2%. If the renovation is not completed, EBT is expected to decrease by 1% year over year due to stronger competition in the area. Assume depreciation expense remains consistent with Year 0 amounts
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