Target Corporation
Cranefield College of Project and Programme Management MODULE M6 Financial Management of Corporate Projects and Programmes
Case: TARGET CORPORATION
1. Executive Summary
Target corporation has a growth strategy of opening 100 new stores per year. Doug Scovanner, the CFO of Target Corporation is preparing for the November meeting of the Capital Expenditure Committee (CEC). He is one of the executive officers who are members of the CEC.
With the fiscal year’s end approaching in January, there was a need to determine which projects best fit Target’s future store growth and capital expenditure plans, with the knowledge that those plans would be shared with both the board and the investment community. Target has a growth strategy of opening approximately 100 new stores a year. CEC referred projects with an investment larger than $50 million to the board of directors for approval.
The five CPRs that Scovanner would present to the board are: Gopher Place, Whalen Court, The Barn, Goldie’s Square and Stadium Remodel.
Recommendations to the Capital Expenditure Committee
The capital expenditure committee should accept all the proposals before it. This will be based on the factors as detailed on part three of this document. The NPV’s of all these projects are positive, a positive NPV contributes favorable to the share price or share value. The Internal Rate of Return of these entire projects are below the prototype store IRR which is a benchmark project. The IRR is an alternative to NPV however if the NPV is positive and the IRR is not what is desired, the NPV may supersede in making an investment decision. The IRR is what is expected based on internal factors. Projects with a low IRR may be funded through debt
Case: TARGET CORPORATION
1. Executive Summary
Target corporation has a growth strategy of opening 100 new stores per year. Doug Scovanner, the CFO of Target Corporation is preparing for the November meeting of the Capital Expenditure Committee (CEC). He is one of the executive officers who are members of the CEC.
With the fiscal year’s end approaching in January, there was a need to determine which projects best fit Target’s future store growth and capital expenditure plans, with the knowledge that those plans would be shared with both the board and the investment community. Target has a growth strategy of opening approximately 100 new stores a year. CEC referred projects with an investment larger than $50 million to the board of directors for approval.
The five CPRs that Scovanner would present to the board are: Gopher Place, Whalen Court, The Barn, Goldie’s Square and Stadium Remodel.
Recommendations to the Capital Expenditure Committee
The capital expenditure committee should accept all the proposals before it. This will be based on the factors as detailed on part three of this document. The NPV’s of all these projects are positive, a positive NPV contributes favorable to the share price or share value. The Internal Rate of Return of these entire projects are below the prototype store IRR which is a benchmark project. The IRR is an alternative to NPV however if the NPV is positive and the IRR is not what is desired, the NPV may supersede in making an investment decision. The IRR is what is expected based on internal factors. Projects with a low IRR may be funded through debt
Bibliography: Firer, C. Ross, SA. Westerfield, RW. Jordan, BD. Fundamentals of Corporate Finance. 4th South African Edition.2009.McGraw-Hill Education(UK)