Question: Please answer both and shownwork/provide excel calculations. As a store manager you are considering a new property to expand your operations. A developer is in
As a store manager you are considering a new property to expand your operations. A developer is in the process of building some additional store space that would be within the right rent range for your store. A 4200 square foot facility could be leased for $12 per square foot per year, and a 10-year lease would be required. Additional fixed costs of operations besides the lease payments would be $3 per square foot. The cost of goods sold at the store has been consistently 65% of revenues but the new facility would increase cost of goods sold by 15%; that is, if the percentage of cost of goods sold to sales was 60%, a 10% increase would change the percentage to, 66%(60%1.10), or an increase in the cost of goods sold percentage of sales of 6%(66%60%). Additional operating costs of 9% of sales are also expected with the new facility. What is the breakeven amount of revenues that the new store must achieve to cover all its costs from the expansion? Add your answer Question 4 Buchanon industries is evaluating a proposal to install solar panels on the roof of its factory near Huntsville. The panels will cost $540 thousand per set. Depending on the price of electricity and the efficiency of the panels, the project will increase net operating. cash flows by either $86 thousand per year or $170 thousand per year with a 67% likelihood that the lesser outcome will occur. The useful life of the panels is 6 years, If early results indicate savings of $170 thousand per year, 3 additional sets of panels will be installed next year at the same cost and with the same projected increase in net operating cash flows. What is the expected NPV of the project (in $ thousands, rounded to one decimal place, e,g, 12.3) including the option to expand. given a discount rate of 12%
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