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DownEast Tourist Mall

DownEast Tourist Mall. Ryan Dresher Ashley Moss Southwestern College-MGMT 565 Instructor-Mohamed Elaoudiy. Agenda. Background Possible Project-DownEast Tourist Mall Project Evaluation Risk Evaluation Conclusion. Background. Waldo County Well known real estate developer

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DownEast Tourist Mall

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  1. DownEast Tourist Mall Ryan Dresher Ashley Moss Southwestern College-MGMT 565 Instructor-Mohamed Elaoudiy

  2. Agenda • Background • Possible Project-DownEast Tourist Mall • Project Evaluation • Risk Evaluation • Conclusion

  3. Background • Waldo County • Well known real estate developer • Known for picking good locations • Needs evaluation of new tourist mall project • DownEast Tourist Mall • Objective: intercept the many tourists heading downeast toward Maine. • $90 million investment

  4. DownEast Tourist Mall • Capital Outlay--$90 million • Construction --3 years w/15 year life • Income • Annual rent from retailers--$12m • 5% of each tenants gross sales--$24m • Cost of Capital –9%

  5. Project Evaluation (Brealey, Myers & Allen, 2011)

  6. Project Evaluation

  7. Risks • Retail Sales Slump • Rental Sales Slump • High Construction Costs • Delayed Construction • Inflation

  8. Sensitivity Analysis

  9. Risk Scenario Analysis

  10. Risk Contingency and Response

  11. Conclusion • NPV and IRR suggest going forward • Low risk of negative NPV • Income would have to dip 30% in all years to cause negative NPV • 6.5 year payback • Recommendation to move forward

  12. References Brealey, R. A., Myers, S. C., & Allen, F. (2011). Principles of corporate finance. (10 ed.). New York, NY: McGraw-Hill.

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