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7300 Case 19

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Veer Raghava Kumar Marthy

on 21 February 2013

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Transcript of 7300 Case 19

Conclusion Shane Introduction Melissa Projects By: Melissa Muncie, Kumar Marthy & Shane Smith Case 19: Target Corporation
Whalen Court, $119,300,000

Gopher Place, $23,000,000

The Barn, $13,000,000

Goldie’s Square, $23,900,000

Stadium Remodel, $17,000,000 Target Corporation Initial Investment NPV, IRR combination for financial calculations

Risk associated with a 10% decline in sales

Used a 75% weight with quantitative data

Used a 25% weight for qualitative demographic data Muncie Disadvantages Resubmission previously approved
Lowest initial investment (13,000,000)
High NPV
High IRR
Penetrate small market and eliminate customers from driving 80-90 miles Advantages The Barn Melissa Disadvantages Resubmission previously approved

Lowest initial investment (13,000,000)

High NPV

High IRR

Penetrate small market and eliminate customers from driving 80-90 miles Advantages The Barn Disadvantages High population growth rate (67%)

Second highest of all the median incomes

Higher IRR (12.3%) Advantages Gopher Place Disadvantages Advantages Whalen Court Muncie Disadvantages Target owns the property and it’s already upgrading to a Superstore

Strong Long-term location

Highest median income of all the projects Advantages Stadium Remodel Disadvantages Area has seen a 16% growth in population over past 5 years and higher population of 222,000

Strong percentage of adults that have completed 4+ years of college Advantages Goldie’s Square Ranked low on weighted analysis
LowerIRR (10.8%)
Lower NPV (15,700)
Over-all rankings that are based on analysis
1.) The Barn…
Highest NPV to investment ratio

Holds highest NPV ($16,434) after worst case scenario, has highest IRR (16.4%) Target Corporation
Conclusion Recap 3.) Whalen Court
Highest possible NPV ($25,900)

BUT… Very high investment required

Very Risky Investment…worst case scenario takes a dramatic impact on NPV (-64% decline)

Low IRR comparatively (9.8%) Target Corporation 5.) Goldie’s Square

Very low NPV to start ($300)

Very risky…NPV drops to (-$3773) in worst case scenario…over a 1300% decline.

NOT RECOMMENDED … TOO RISKY TO CHANCE Target Corporation Questions? NPV IRR 10% decline in sales Financial Analysis Ranking Demographic Ranking Overall Ranking 4.) Stadium remodel
Fourth highest NPV to start

Very Risky investment…over 50% drop in NPV if/when worst case scenario occurs

If more weight is given to demographics, stadium becomes slightly better investment Shane 2.) Gopher Place
High NPV to investment ratio (2nd to The Barn)

Holds 2nd highest NPV ($12,078) after worst case scenario

Has highest population growth Shane Shane Need to take into account size of the project

Project might not be looking at long term,
effects of requiring an update Melissa Melissa 10% change in sales can effect project NPV by -28%
Not updating to Superstore Super Wal-Mart competition
Lowest NPV ($300,000)
Lowest IRR (8.1%) Melissa Opportunity for a new store opening in a major growth area
Dense foot traffic (632,000 people)
Median income around $50,000 per household
High Fashion Appeal
NPV of $25,900 is the highest Massive investment of $119,300,000
Lower IRR of 9.8%
Unique design
Only property Target doesn’t own which could have long-term implications Melissa Analysis Shane Shane Kumar Kumar Kumar Kumar Kumar Kumar Analysis Sensitivity Analysis Kumar
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