Think of any retailer that operates many stores throughout the country, such as Old Navy, Hallmark Cards, or Radio Shack, to name just a few. The retailer is often seeking to open new stores and needs to evaluate the profitability of a proposed location that would be leased for 5 years. An Excel model is provided in the New Store Financial Model spreadsheet. Use Scenario Manager to evaluate the cumulative discounted cash flow for the fifth year under the following scenarios:

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Scenario 3 Scenario 2 5% 30% $225,000 $350,000 Scenario 1 Scenarios for Problem 32 Inflation rate Cost of merchandise (% of sales) Labor cost Other expenses First-year sales revenue Sales growth year 2 Sales growth year 3 Sales growth year4 Sales growth year5 3% 26% 196 25% $150,000 $300,000 $600,000 15% 10% 6% $200,000 $325,000 600,000 $800,000 22% 15% 11% 5% 25% 18% 1496 8% 3%