1. suppose if the sales of the company increase by 10%, what is the NPV of all the five projects (Gopher place, Whalen court, The Barn, Goldie's square and Stadium remodel )
2.  Calculate other project evaluation criteria:
   • Payback period
   • Discounted payback period
   • Breakeven point
   • Profitability index,
   • Average accounting return

  

1. 
   

Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Investment ($000) $23,000 $119,300 $13,000 $23,900 $17,000 Economic Analysis Summary of Project Proposals Net Present Value* Base Case NPV ($000) $16,800 $25,900 $20,500 $300 $15,700 10% Sales Decline Impact on NPV ($000) ($4,722) ($16,611) ($4,066) ($4,073) ($7,854) IRR 12.3% 9.8% 16.4% 8.1% 10.8% * NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows. **Trade area is the geographical area from which 70% of store sales will be realized. Population 70,000 632,000 151,000 222,000 N/A Trade Area** Population Increase 2000-2005 27% 3% 3% 16% N/A Median Income $56,400 $48,500 $38,200 $56,000 $65,931 % Adults 4+ yrs. college 12% 45% 17% 24% 42% Gopher Place was a request for $23.0 million to build a P04 store scheduled to open in October 2007. The prototype NPV would be achieved with sales of 5.3% below the R&P forecast level. This market was considered an important one, with five existing stores already in the area. Wal-Mart was expected to add two new supercenters in response to favorable population growth in the trade area, which was considered to have a very favorable median household income and growth rate. Because of the high density of Target stores, nearly 19% of sales included in the forecasts were expected to come from existing Target stores