DownEast Tourist Mall Ryan Dresher Ashley Moss

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Presentation transcript:

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 DownEast Tourist Mall 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

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%

(Brealey, Myers & Allen, 2011) 4/24/2017 Project Evaluation (Brealey, Myers & Allen, 2011)

Project Evaluation

Risks Retail Sales Slump Rental Sales Slump High Construction Costs Delayed Construction Inflation

Sensitivity Analysis

Risk Scenario Analysis

Risk Contingency and Response

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

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