Discussion Prior To Beginning Work On This Topic
Discussion 1prior To Beginning Work On This Discussion Please Read Th
Prior to beginning work on this discussion, please read the article by Hayley Peterson, "15 Companies That Are Defying the Retail Meltdown by Opening Hundreds of New Stores." While many retailers are closing stores, some are rapidly building new locations, with at least one—Dollar General (NYSE: DG)—adding as many as 900 stores this year (Peterson, 2018). Obtain Dollar General’s Form 10-K for the fiscal year ending on December 31, 2017. The Form 10-K can be obtained either from the SEC’s EDGAR Filing system or the “Investor Relations” link on the company’s website. Read the “Growth Strategies” and the “Consolidated Statements of Cash Flows” sections of Dollar General’s 10-K form to answer the following questions in an initial post of at least 200 words:
- How many stores is Dollar General planning to open during its 2018 and 2019 fiscal years?
- By what percentage would these new stores increase the size of the company?
- How much cash did Dollar General spend on investing activities during its 2016, 2017, and 2018 fiscal years?
- Do you think the amount spent on investing activities represents the full costs that Dollar General incurred to open new stores? Explain your answer.
- Where did Dollar General get the cash used to make these investments?
Prior to beginning work on this discussion, please read the article "Capital Investment Appraisal Techniques: A Survey of Current Usage" by Sangster (1993). After setting the company’s goals, managers evaluate capital investment projects and decide which should be funded. Suppose a company has four different capital budgeting projects from which to choose but has constrained funds and cannot implement all of the projects. The following table contains information about four projects in which X Corporation has the opportunity to invest. This information is based on estimates that different managers have prepared about the company's potential projects.
| Project | Investment Required | Net Present Value | Life of Project | Internal Rate of Return | Profitability Index | Payback Period (years) | Accounting Rate of Return |
|---|---|---|---|---|---|---|---|
| A | $226,000 | 36% | 1.17 | 2% | |||
| B | $406,000 | 50% | 1.13 | 3% | |||
| C | $1,040,000 | 152% | 1.16 | 2% | |||
| D | $1,630,000 | 19% | 1.02 | 3% |
Part 1: Rank the four projects in order of preference using the following criteria: (a) Net Present Value, (b) Profitability Index, (c) Internal Rate of Return, (d) Payback Period, and (e) Average Rate of Return. Indicate the first, second, third, and fourth preferred projects.
Part 2: Write a response of at least 200 words discussing the usefulness of capital investment techniques (net present value, profitability index, internal rate of return, payback period, and average rate of return) in selecting the four investment opportunities described in part 1.