Case19 requires little data manipulation. Most of the analysis will focus on the interpretation of the case and the case exhibits. The supporting spread sheets named Case_19_student_templates is post on WebCT. The central objectives of the case are as follow: 1. To understand the capital-budgeting-decision process for a large corporation, such as Target. Each decision process should support the corporations business and financial objectives. The capital-investment decision is important strategically because of the choice of where to spend the funds. 2. To review the use of NPV and IRR as decision metrics. Although individual cash flows are not provided for the CPRs, the dashboards give substantial sensitivity analysis for changes in the value drivers of the projects, and therefore afford the opportunity for students to review the principles of NPV and IRR calculations. 3. To understand the multidimensionality of a capital-investment decision. As a major retailer, Target executives recognized the importance of brand awareness to the success of the company, which makes the NPV only part of the consideration for a capital-project request. Specifically, the decision making process involves application of the financial principles such as risk and return and maximizing shareholder value. The following questions are suggested to be used as outline for your discussion. 1. How does Targets business model compare with Wal-Marts and Costcos? 2. What is Targets capital-budgeting process? What is the key value driver for Target? What is managements highest priority in their decision making process? Is it consistent with the companys business and financial objectives? 3. Be prepared to describe and critique Targets capital-budgeting system. Give specific consideration to the role of the real-estate managers and the makeup of the CEC. Question 2 and 3 are related to certain extent. 4. Explain what the dashboards tell you as a manager. Isnt the NPV enough information for you to make a go/no-go decision? Any other capital budgeting tools might be useful in your quantitative analysis? Why the various pieces of information have been chosen to be part of the dashboard. 5. Which of the five CPRs did you accept? Which project attributes did you consider as part of your decision? 6. Which of the five CPRs should Doug Scovanner accept? Be prepared to explain how each of the considerations will influence your decision, how to combine them to make final decisions: a. NPV and IRR b. Size of the project c. Cannibalization of other stores sales d. Store sensitivities e. Variance to prototype f. Customer demographics g. Brand-awareness impact 7. Why does Target use different hurdle rates for the store and the credit cards (9% and 4%, respectively)? What process would you use to estimate these discount rates to see if they are reasonable? 8. As a member of the CEC, would you continue to approve CPRs if it meant that Target would need to fund the requests with external funds, either debt or equity?