When calculating the Differential Revenue - Savings from EAS. Why should I time 0.5 in the year of 2007.

Murphy Stores: Capital Projects John S. Strong, College of William and Mary Tom Becker, Manager of Capital Planning for Murphy Stores, was reviewing possible projects that might be funded in 2007. The slowdown in the housing market had made Murphy's capital committee (which approved all capital spending over $1 million) cautious about a few investments that were aimed at increasing revenues; the capital committee now wanted to consider reallocating capital funds to cost-saving projects. Becker had previously been a project analyst, but had been promoted to Manager of Capital Planning (reporting to the Chief Financial Officer) not just for his technical financial skills, but also for his willingness to thoroughly discuss projects with members of the store operations and merchandising teams who were on the front lines of the business. Murphy Stores was a large retailer with multiple brands and formats. There were large "full-line" department stores which carried a complete assortment of apparel, appliances, home goods, and general merchandise. (These stores were similar to Sears or JC Penney or Target.) The second format was smaller hardware stores which carried a moderate assortment of home improvement merchandise, comparable to larger Ace or True Value Hardware stores. The company also had small locally-franchised dealer stores, and tire and auto centers, but which were a much smaller part of the total business. Murphy had 200 full-line department stores and 200 hardware stores, with total revenues of about $10 billion. Including online operations, the department store segment had experienced sales growth of about six percent annually for several years. Growth in home improvement spending had driven the hardware store sales growth at nine percent annually over the past five years. Murphy's total capital budget, like many broadline retailers, averaged about 1.5% - 2.0% of revenues, and about 4% - 7% of fixed assets. The 2007 capital budget had been revised downward from an initial $175 million to $150 million, as some projects were deferred. Historically, the company had allocated about 40 percent to reinvestment or replacement of existing assets, 35 percent to investments aimed at improving business operations and efficiency, and 25 percent to new growth initiatives. The company's weighted average cost of capital typically was applied for reinvestment or business improvement projects, with a varying premium of 2% to 4% for higher risk projects or growth initiatives