Black Feather Indian Nation is a 900 square-mile territory in North Dakota that has the legal right to sell gasoline without having to collect or pay state and federal taxes on it. Gasoline in North Dakota sells for $1.20 per gallon, which includes $0.50 of taxes. The reservation is in a rural part of North Dakota and is within 3–20 miles of five small cities, each with a population of between 20,000 and 60,000 people.

Black Feather Indian Nation asks your consulting firm to advise it about entering the retail gasoline business. It can buy gasoline at the wholesale delivered price of $0.65 per gallon. The Nation is considering building five stations on the perimeter of its territory to sell tax-free gasoline to non-

Black Feather consumers for $0.70 per gallon. The total cost of the five stations, new road signs, and working capital is $4 million.

The consulting partner of your firm in charge of this assignment is preparing the firm’s proposal to the Nation. He asks you to prepare a short memo outlining the analysis you think is necessary to answer this question: “Should the Black Feather Indian Nation invest $4 million and enter the retail gasoline business?”

Required:

Your memo should contain the following elements:

a. An outline of the general methodology (approach) you propose.

b. A detailed list of the data you propose to collect to implement the methodology suggested in (a). For each data item, describe how you plan to use the data.