Based on the information in the project dashboards for each of the projects, which  projects would you recommend, and Why? See [Exhibit TN-3] as an example. 

Which project attributes did you put more weight on when comparing the different  projects? More generally, what do you think is more important, the strategic, marketing aspect or the financial, economic aspects?

Now assume that there is only a limited amount of capital/resources, i.e., $120M. Which projects would you choose? Use the profitability index numbers in the [Exhibit TN-4] as the basis for your decision.

 

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Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Source: Target Corp Investment (S000) $23,000 $119,300 $13,000 $23,900 $17,000 Base Case NPV ($000) $16,800 $25,900 Exhibit TN3 TARGET CORPORATION Pros and Cons for Project Proposals $300 IRR 12.3% 9.8% $20,500 16.4% 8.1% $15,700 10.8% Pro High NPV, high IRR High NPV, high brand impact, urban center, high investment High NPV, high IRR, low investment, new market/no competition or cannibalization, robust to sensitivity tests Strategic value of area, brand awareness, good demographics NPV and IRR are adequate, established store Con High cannibalization, impact of Wal- Mart Super Center, Low IRR, high investment, lease adds risk. Prior problem with developer, rural market-poor demographics, potential for Wal-Mart to enter, Poor NPV, poor IRR, NPV depends on REDCard performance, SuperTarget failure would be high profile Marginal IRR, precedent for other remodels Gopher Place Whalen Court The Barn Goldie's Square Stadium Remodel Source: Target Corp Investment (S000) $23,000 $119,300 $13,000 $23,900 $17,000 Base Case NPV ($000) $16,800 $25,900 Exhibit TN3 TARGET CORPORATION Pros and Cons for Project Proposals $300 IRR 12.3% 9.8% $20,500 16.4% 8.1% $15,700 10.8% Pro High NPV, high IRR High NPV, high brand impact, urban center, high investment High NPV, high IRR, low investment, new market/no competition or cannibalization, robust to sensitivity tests Strategic value of area, brand awareness, good demographics NPV and IRR are adequate, established store Con High cannibalization, impact of Wal- Mart Super Center, Low IRR, high investment, lease adds risk. Prior problem with developer, rural market-poor demographics, potential for Wal-Mart to enter, Poor NPV, poor IRR, NPV depends on REDCard performance, SuperTarget failure would be high profile Marginal IRR, precedent for other remodels

Answer rating: 100% (QA)

Project Initial investment NPV IRR PI Gopher place 2300... View the full answer