Travis Allender James Boyd Ebony Branch Jeff Clark

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Presentation transcript:

Travis Allender James Boyd Ebony Branch Jeff Clark Waldo County Travis Allender James Boyd Ebony Branch Jeff Clark

Agenda Background Statement of Problem New Options Financial Info and Analysis Recommendations Conclusion

Background Waldo County Real estate developer Known for good instincts Works long hours and expects dedication from employees Needs financial assistance for some projects

Statement of Problem $90 Million Outlet Mall Proposed by Waldo County Purpose is to intercept tourists heading towards Maine Will this outlet mall make money for the investment that will be made?

New Options Task One Task Two Task Three Task Four (final task) Summary of projected revenues and costs Task Two Analyze potential problems Task Three Analyze delays and overruns Task Four (final task) Calculate NPV and sensitivity scenario analysis Task One: We need to determine if the project makes financial sense. Task Two: Inflation and shortage of sales were concerns. We need to analyze what might go wrong. Things like construction costs, revenues, operating and maintenance costs, and real estate taxes are all likely to rise with inflation. Task Three: Will need to look at zoning laws/rules/regulations, as well as environmental approvals we would have to get for the project. Potential for cost overruns to increase 25% up to a year.

Financial Info and Analysis YEAR 1 2 3 4 5-17 INVESTMENT: Land 30 * Construction 20 10 OPERATIONS: Rentals 12 Share of Retail Sales 24 Operating and Maintenance Costs Real Estate Taxes

Financial Info and Analysis cont. NPV for outlet mall: NPV $50.24 million Tax rate of 35%, 2% inflation rate Construction Delays Increase timeline by 1 year Harmful to profit estimates Add $2-4 million in extra operating costs Add $2-3 million in extra taxes

Recommendations Recommendation is that the outlet mall project is financially stable. Worst case scenario for retail sales did make a large impact on figures, yet still allowed a positive NPV.

Conclusion Bottom Line… Outlet Mall project is a stable investment Projected to be a money maker