2. Your firm is preparing to open a new retail strip mall and you have multiple

Question

2. 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 NPV (net present values) for each of the businesses that would like to lease space in our strip mall are provided below: 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?

Explanation / Answer

So i will select, Walverde Drugs,Multigular Wireless,Pizza Warehouse,30 1/2 flavours and Video Now.All these add up to 15000 sq feet.

Business None Sq Feet Expected NPV NPV/sq ft Rank Income Video Now 4000 70000000 17500 5 Gord's Gym 3500 52500000 15000 7 Pizza Warehouse 2500 52500000 21000 3 Super Clips 1500 25500000 17000 6 c 1500 28500000 19000 4 S-Mart 12000 180000000 15000 7 Walverde Drugs 6000 147000000 24500 1 Multigular Wireless 1000 22250000 22250 2 Selection Ranks:1,2,3,4,5

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