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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
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 |
| PI (times) | ||||
- 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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education