The CEO of Redstone Construction Co$.,$ Blake James, has just come from a meeting with his construction and marketing staff, where he was given the latest client request for a retail store.

Company Background

Redstone Construction Company has led the real estate construction and development industry for several decades. The company has completed numerous residential and commercial projects as a general contractor, earning a reputation for high$-$quality work and customer satisfaction.

Its skilled professionals have the experience and expertise to handle every aspect of the construction process, from the initial design and planning stages to the final touches and inspections. The company prides itself on detail and ability to deliver projects on time and within budget.

Retail Store Projects

Currently, the company has purchased $20,000$ square feet of land for construction.

The initial studies indicate that this shopping center will support a floor$-$to$-$area ratio of $20$ percent and an $80$ percent leasable area ratio. This means that the gross building area $($GBA$)$ will be $4000$ sq$.$ ft$.,$ and the gross leasable area $($GLA$)$ will be $16,000$ sq$.$ ft$.$

Below is the list of the clients$$ requests for leasing space.

Each business will pay a fixed annual rent plus a percentage of gross sales generated. The cash flows from each of the businesses have approximately the same amount of risk. The business names, square footage requirements, and annual expected cash flows for each of the businesses that would like to lease space are provided below:

Business Name Square Feet Required Expected Annual Cash Flow

Videos Now $4,000$ $$70,000$

Gords Gym $3,500$ $$52,500$

Pizza Warehouse $2,500$ $$52,500$

Super Clips $1,500$ $$25,500$

$301/2$ Flavors $1,500$ $$28,500$

S$-$Mart $12,000$ $$180,000$

Wal Verde Drugs $6,000$ $$147,000$

Multigoal Wireless $1,000$ $$22,250$

As a financial advisor for Redstone Construction, you have been assigned to find the best possible combinations for allocating the retail space among the clients. You immediately recognized this is a problem of resource allocation.

a$.$ Discuss the measurement you will use to allocate leasable space.

b$.$ Discuss which businesses will be granted a lease and why.

c$.$ What would be the total monthly cash flow the Company will receive?

d$.$ Is the total space leased?

e$.$ If the total space is not leased, is there another combination of spaces that will allow all the spaces to be leased?

Part II

Blake James feels that the proper way to determine each leased space's profitability is to estimate the PV of each investment. Given that the company requires a rate of return of $12\%$ on all of its investments and a five$-$year lease obligation, what would be the