NPV & IRR
This project has an NPV of almost $7.6 gazillion high than the accepted NPV of $13 one thousand thousand for the prototype and a combined IRR (for store gross revenue and Credit sales) of 16.4% which is significantly higher than the 11% IRR for the prototype.
Even If we look deeper in to the IRR grammatical constituents for store sales and faith sales we still see that both IRRs for the project (17.5% and 8.2%) are well ahead of the hurdle rate narrow down by the company (9% for store cash flows and 4% for credit card cash flows).
Comparing the avail able-bodied data to grade 2002 (the first estimates store opening date), it is obvious that at least at the take aim of store sales, the project NPV ($17.4 one thousand thousand) is much more attractive than the $4.3 trillion in 2002.the same conclusion is in like manner applicable for IRR % in store sales.
Size of the project
If show was able to start this project in 2002 its investment size would be $1.6 million less than current opening date. This project bequeath need $3.
4 million less than the P04 project and the only component in the investment, which will be more, compared to P04 is the building cost (378 K$).
Cannibalization of other stores sales
As the nearest tar last store closest to the project is 80 miles away, no cannibalization of sales is expected. And this store will generate a sale of $30.5 million in 5 years, which will be almost 2.7 million dollars above expected sales from P04. This store is assumed to impart its a maximum market share from Walmart in 2008.
Store Sensitivities
Even if this store has 18.1% lower sales than the forecasted level by R&P, it can achieve the accepted NPV of prototype, besides, kink cost can increase to near $10 million and still the project can achieve the...If you want to get a full essay, order it on our website: Orderessay
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