The case requires that you evaluate five capital budgeting proposals being considered by Target.
Each student should submit a written case analysis by Wednesday, February 23 at 11:59 PM. The case analysis should consist of 15-20 PowerPoint slides that address the questions in the case and supplemented below. Please include your name on the case analysis.
Your analysis should address the following questions:
1. Provide and overview of the case, including a description of Target Corporation and how its business model compares with those of competitors.
2. Describe Target’s capital budgeting process, including a discussion of the financial metrics and other considerations considered in the decision process.
3. Describe each of the Capital Project Requests (CPRs)
4. What recommendation would you make for each of the CPRs—accept or reject? Explain how you considered the metrics and other considerations for each CPR in your decisions.
5. Why does Target use different hurdle rates for the store and credit card businesses (9% and 4%, respectively)? What data would you use to confirm whether those rates are reasonable?
6. Would your decisions change if the approval of a CPR would require that Target raise external funds in the debt or equity markets to fund the CPR?
The analysis will be evaluated on the following criteria: (1) quality of answers; (2) clarity of the PowerPoint presentation
The analysis will be weighted as follows:
· Overview of case 15 points
· Description of capital budgeting process 15
· Description of each of the CPRs 15
· Recommendations 35
· Hurdle rates 10
· Effect of financing on decision 10