217353875 Case Study 20 Target Corporation - 2342 Words

Target Corporation Patrick Cunningham M03619570 Professor John Phelps, Ph.D. February 6, 2014 Executive Summary: This case study analyzed five different projects Target Corporation had to decide on capital spent for which project created the most value and the most growth for the company and its shareholders. By analyzing the financial statements and exhibits of each project, I was able to determine the positives and negatives of each of these alternatives. The alternatives were Gopher Place, Whalen Court, The Barn, Goldie’s Square, or Stadium Remodel. The recommendation provided for Target Corporation is choosing the Stadium Remodel project. There were three main factors used for choosing this project. First, its low†¦show more content†¦The positives of this project are that it has the highest NPV, highest total RP sales, highest population, and highest percent of adults with four plus years of college. First, Whalen Court not only has the highest NPV but they have the greatest opportunity. If sales increase by 10% it would be over $16 million more than the prototype. Second, this projects sales could be by far the greater than the prototypes of any other projects. The 1st and 5th year sales equivalents would be over $52 and $69 million respectively. Compare this to the other projects and they are 10’s of millions more. Third, the Whalen Court project has the highest population at 632,000, which means they have the largest customer pool. Their population is almost three times greater than the second closest project. Lastly, this project has the highest percentage of adults with four plus years of college. This is very important because these are the customers Target is trying to attract the most. Now, there are some negatives of this project as well. First, the investment size is much greater than the typical prototype. It is actually 409% (Appendix 1) more than the prototype. The next closest project is only 31% more, which makes this project very concerning. Next, is the building cost versus the prototype. The project is for a lease of a buildin g and the cost are very high compared to the other projects at over $15 million more than the prototype. Add in the fact that Target usually