Calculate the five project evaluation criteria: Paybackperiod Discounted paybackperiod Breakevenpoint Profitability index, Average accounting return Gopher Place

1. Calculate the five project evaluation criteria:
   • Payback period
   • Discounted payback period
   • Breakeven point
   • Profitability index,
   • Average accounting return

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Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Investment ($000) $23,000 $119,300 $13,000 $23,900 $17,000 Net Present Value* Base Case NPV ($000) $16,800 $25,900 $20,500 $300 $15,700 10% Sales Decline Impact on NPV ($000) ($4,722) ($16,611) ($4,066) ($4,073) ($7,854) IRR 12.3% 9.8% 16.4% 8.1% 10.8% * NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows. **Trade area is the geographical area from which 70% of store sales will be realized. Population 70,000 632,000 151,000 222,000 N/A Trade Area** Population Increase 2000-2005 27% 3% 3% 16% N/A Median Income $56,400 $48,500 $38,200 $56,000 $65,931 % Adults 4+ yrs. college 12% 45% 17% 24% 42% Gopher Place was a request for $23.0 million to build a P04 store scheduled to open in October 2007. The prototype NPV would be achieved with sales of 5.3% below the R&P forecast level. This market was considered an important one, with five existing stores already in the area. Wal-Mart was expected to add two new supercenters in response to favorable population growth in the trade area, which was considered to have a very favorable median household income and growth rate. Because of the high density of Target stores, nearly 19% of sales included in the forecasts were expected to come from existing Target stores. Whalen Court was a request for $119.3 million to build a unique single-level store scheduled to open in October 2008. The prototype NPV could be achieved with sales of 1.9% above the R&P forecast level. Although Target currently operated 45 stores in this market, the Whalen Court market represented a rare opportunity for Target to enter the urban center of a major metropolitan area. Unlike other areas, this opportunity provided Target with major brand visibility and essentially free advertising for all passersby. Considering Target's larger advertising budget, the request for more than $100 million of capital investment could be balanced against the brand awareness benefits it would bring. Further, this opportunity was only available for a limited time. Unlike the majority of Target stores, this store would have to be leased. Thus if it was not approved at the November meeting, the property would surely be leased by another retailer. Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Investment ($000) $23,000 $119,300 $13,000 $23,900 $17,000 Net Present Value* Base Case NPV ($000) $16,800 $25,900 $20,500 $300 $15,700 10% Sales Decline Impact on NPV ($000) ($4,722) ($16,611) ($4,066) ($4,073) ($7,854) IRR 12.3% 9.8% 16.4% 8.1% 10.8% * NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows. **Trade area is the geographical area from which 70% of store sales will be realized. Population 70,000 632,000 151,000 222,000 N/A Trade Area** Population Increase 2000-2005 27% 3% 3% 16% N/A Median Income $56,400 $48,500 $38,200 $56,000 $65,931 % Adults 4+ yrs. college 12% 45% 17% 24% 42% Gopher Place was a request for $23.0 million to build a P04 store scheduled to open in October 2007. The prototype NPV would be achieved with sales of 5.3% below the R&P forecast level. This market was considered an important one, with five existing stores already in the area. Wal-Mart was expected to add two new supercenters in response to favorable population growth in the trade area, which was considered to have a very favorable median household income and growth rate. Because of the high density of Target stores, nearly 19% of sales included in the forecasts were expected to come from existing Target stores. Whalen Court was a request for $119.3 million to build a unique single-level store scheduled to open in October 2008. The prototype NPV could be achieved with sales of 1.9% above the R&P forecast level. Although Target currently operated 45 stores in this market, the Whalen Court market represented a rare opportunity for Target to enter the urban center of a major metropolitan area. Unlike other areas, this opportunity provided Target with major brand visibility and essentially free advertising for all passersby. Considering Target's larger advertising budget, the request for more than $100 million of capital investment could be balanced against the brand awareness benefits it would bring. Further, this opportunity was only available for a limited time. Unlike the majority of Target stores, this store would have to be leased. Thus if it was not approved at the November meeting, the property would surely be leased by another retailer.

Answer rating: 100% (QA)

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