Greater Findlay Development Consortium is preparing to open a new retail strip mall and have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent plus a percentage of the gross sales generated each year. The cash flows from each of the businesses has approximately the same amount of risk. The business names, annual expected cash flows, and initial capital outflow for each of the businesses that would like to lease space in the strip mall are provided below. Greater Findlay Development Consortium uses a 12% hurdle rate which is its cost of capital. All business will be evaluated based on 4-year term because the contract will expire in four years. Video Now Apple Garden Croger Mart Horizon Wireless Initial Capital Outlay ($200,000) ($298,000) ($248,000) ($272,000) Annual Net Cash Flows Year 1 65,000 100,000 80,000 95,000 Year 2 70,000 135,000 95,000 125,000 Year 3 80,000 90,000 90,000 90,000 Year 4 40,000 65,000 80,000 60,000 NPV ($) PI (times) IRR (%) Calculate NPV, PI, and IRR of all business projects. (fill the table above). Which business (es) should Greater Findlay undertake during the upcoming year assuming it has no budget restrcitions? Make sure to juastify your answer. Which business(es) should Greater Findlay undertake during the upcoming year if it has only $600,000 of funds available? Make sure to juastify your answer Which business(es) should Greater Findlay undertake during the upcoming year if it has only $300,000 of capital funds available? Make sure to juastify your answer.

Greater Findlay Development Consortium is preparing to open a new retail strip mall and have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent plus a percentage of the gross sales generated each year. The cash flows from each of the businesses has approximately the same amount of risk. The business names, annual expected cash flows, and initial capital outflow for each of the businesses that would like to lease space in the strip mall are provided below. Greater Findlay Development Consortium uses a 12% hurdle rate which is its cost of capital. All business will be evaluated based on 4-year term because the contract will expire in four years. Video Now Apple Garden Croger Mart Horizon Wireless Initial Capital Outlay ($200,000) ($298,000) ($248,000) ($272,000) Annual Net Cash Flows Year 1 65,000 100,000 80,000 95,000 Year 2 70,000 135,000 95,000 125,000 Year 3 80,000 90,000 90,000 90,000 Year 4 40,000 65,000 80,000 60,000 NPV ($) PI (times) IRR (%) Calculate NPV, PI, and IRR of all business projects. (fill the table above). Which business (es) should Greater Findlay undertake during the upcoming year assuming it has no budget restrcitions? Make sure to juastify your answer. Which business(es) should Greater Findlay undertake during the upcoming year if it has only $600,000 of funds available? Make sure to juastify your answer Which business(es) should Greater Findlay undertake during the upcoming year if it has only $300,000 of capital funds available? Make sure to juastify your answer.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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	Video Now	Apple Garden	Croger Mart	Horizon Wireless
Initial Capital Outlay	($200,000)	($298,000)	($248,000)	($272,000)

Annual Net Cash Flows
Year 1	65,000	100,000	80,000	95,000
Year 2	70,000	135,000	95,000	125,000
Year 3	80,000	90,000	90,000	90,000
Year 4	40,000	65,000	80,000	60,000
NPV ($)
PI (times)
IRR (%)

Calculate NPV, PI, and IRR of all business projects. (fill the table above).
Which business (es) should Greater Findlay undertake during the upcoming year assuming it has no budget restrcitions? Make sure to juastify your answer.
Which business(es) should Greater Findlay undertake during the upcoming year if it has only $600,000 of funds available? Make sure to juastify your answer
Which business(es) should Greater Findlay undertake during the upcoming year if it has only $300,000 of capital funds available? Make sure to juastify your answer.

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