Explain what the dashboard tells you as a manager

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Reference no: EM133860221

Discussion

Case Study: Target Corporation (available in Course-Pack).

Study and analyze the above Case. At a minimum, your analysis must discuss answers to the following:
1. What is Target's Capital Budgeting Process? Is it consistent with the Company's business and financial objectives?
2. Explain what the Dashboard tells you as a manager. Isn't the NPV enough information for you to make a go/no-go decision?
3. Which of the five capital projects requests (CPRs) did you accept? Which project attributes did you consider as part of your decision?
4. Why does Target use different hurdle rates for the store and the credit cards (9% and 4% respectively)? What process would you use to estimate these discount rates to see if they are reasonable? Get professional assignment help services from verified experts!
5. As a member of the Capital Expenditure Committee (CEC), would you continue to approve CPRs if it means that Target would need to fund the request with external funds, either debt or equity?

Case Study Objectives

1. To understand the Capital Budgeting Decision Process for a large corporation. Each decision process should support the corporation's business and financial objectives. The capital investment decision is important strategically because of the choice of where to spend funds.

2. To review the use of NPV and IRR as decision metrics. Although individual cash flows are not provided for the CPRs, the dashboard gives substantial sensitivity analysis for changes in the value drivers of the projects, and therefore afford the opportunity to review the principles of NPV and IRR calculations.

3. To understand the Multidimensionality of Capital Investment Decision. As a major retailer, Target executives recognize the importance of brand awareness to the success of the company, which makes the NPV only part of the consideration for a capital project request.

Reference no: EM133860221

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