• Management is considering expanding the business to a new state. The choices are Texas, California, and Michigan. Management expects to have the following cost of capital for each state: TX 12.5%, CA 11.25% and MI 9.5%. Cash outlays are as follows
• TX Initial outlay: 1,600,000, increased profit years 1-5: 250K, 350K, 450K, 625K and 650K.
• CA Initial outlay: 2,500,000, increased profits years 1-5: 450K, 525K, 675K, 800K, and 925K.
• MI Initial outlay: 1,950,000, increased profits years 1-5; 450K, 500K, 575K, 525K, 600K.
  1. Perform a NPV analysis on three potential new stores and provide insights into the following:
     • If Management ignored time value of money, which projects would you recommend they invest in and in what order? Why?
     • What project order would you recommend based on NPV calculations? If you had unlimited funding which projects would you invest in?