STATEMENT OF THE PROBLEM

Which among the five proposed projects that have positive NPVs should the Capital Expenditure
Committee choose for Target’s future store growth and capital expenditure plans?
ANALYSIS
• Assigned weights to the financial and demographic data available
75% is assigned for financial data
25% is assigned to demographic data
• Risks associated with sales are considered
• NPV, IRR and the Profitability Index of each project is analyzed.
• Demographic data is given importance.
ANALYSIS
Stadium Remodel

ADVANTAGES DISADVANTAGES
Target already owns the property Ranked low on weighted analysis done
Strong long – term location Lower IRR (10.8%)
Highest median income compared to other projects Lower NPV (15,700)
ANALYSIS
The Barn

ADVANTAGES DISADVANTAGES
Only a resubmission, a previously approved project
Lowest initial investment among the projects Population Increase
High IRR, High NPV Median Income
Represents a new market for Target
ANALYSIS
Gopher Place

ADVANTAGES DISADVANTAGES
Population Growth Target stores within the area
Median Income Competitor Entry
High IRR (12.3%)
High NPV (18%)
ANALYSIS
Goldie’s Square

ADVANTAGES DISADVANTAGES
Population Growth Competition
Lowest NPV (800000)
Lowest IRR (8.1%)
ANALYSIS
Whalden Court

ADVANTAGES DISADVANTAGES
Major growth area Massive Investment
Median Appeal Lower IRR (9.8%)
Dense foot traffic Unique Design
Highest NPV Property is leased