The development team is preparing to open a new retail strip mall and have multiple businesses that would like to lease space in it. Each business will pay a fixed amount of rent plus a percentage of the gross sales generated each year. The cash flows from each of the businesses has approximately the same amount of risk. The businesses names, annual expected cash flows, and initial capital outflow for each business that would like to lease space in the mall are below. The development team uses a 12% hurdle rate which is its cost of capital. All businesses will be evaluated on a 4 year term because the contract will expire in 4 years.

Video Plus initial capital outlay: (200,000) annual net cash flows: year 1-4: 65,000 ; 70,000 ; 80,000 ; 40,000

Apple Time initial capital outlay: (298,000) annual net cash flows: year 1-4: 100,000 ; 135,000 ; 90,000 ; 65,000

Croger initial capital outlay: (248,000) annual net cash flows: year 1-4: 80,000 ; 95,000 ; 90,000 ; 80,000

Go Wireless initial capital outlay: (272,000) annual net cash flows: year 1-4: 95,000 ; 125,000 ; 90,000 ; 60,000

1. Calculate the NPV, PI and IRR of all business projects.

2. which business (es) should the development team undertake during the upcoming year assuming it has no budget restriction? why?

3. which business(es) should the development team undertake during the upcoming year assuming it has only $600,000 of funds available? why?

4. which business(es) should the development team undertake during the upcoming year it it has only $300,000 of capital funds available? why?