Question

c. Calculate the NPV for each project. Using the NPV rule and assuming the projects are mutually exclusive, what project would you recommend to Invest Co.?

Project	NPV
A
B
C
D
E

	Project Selection
Mutually Exclusive Case

d. Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month. The cash flows from each of the businesses has approximately the same amount of risk. The business names, square footage requirements, and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:

Business Name	Square Feet Required	Expected Monthly Cash Flow
Videos Now	4,000	70,000
Gords Gym	3,500	52,500
Pizza Warehouse	2,500	52,500
Super Clips	1,500	25,500
30 1/2 Flavors	1,500	28,500
S-Mart	12,000	180,000
WalVerde Drugs	6,000	147,000
Multigular Wireless	1,000	22,250

If your new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?

Business Name	Square Feet Required	Expected Monthly Cash Flow	Profitability Index	Rank
Videos Now	4,000	70,000
Gords Gym	3,500	52,500
Pizza Warehouse	2,500	52,500
Super Clips	1,500	25,500
30 1/2 Flavors	1,500	28,500
S-Mart	12,000	180,000
WalVerde Drugs	6,000	147,000
Multigular Wireless	1,000	22,250

Selected Projects

1)

2)

3)

4)

5)

Answer 1

D.

Answer to C can not be calculated without information of cost of capital and cash flows information.