Accounting

Wal-Mart Stores has run into opposition when it has tried to open stores in certain New England and Pennsylvania towns. Wal-Mart’s capital budgeting process has determined that these locations would be profitable for the corporation. However, these communities have successfully fought to keep Wal-Mart from opening stores. The communities argue that a Wal-Mart store will destroy the downtown businesses of the community and hurt the town’s quality of life. Despite being rebuffed by the citizens of these towns, Wal-Mart has continued its efforts to locate stores in these communities.

Should Wal-Mart continue or stop its efforts to open stores in these communities? Why?

Your supervisor has just completed a discounted cash flow analysis on a 15-year, $3,000,000 project. She is upset that the net present value was negative and is getting ready to report her findings to senior management and recommend that the company abandon the project. Upon reviewing the computations, you discover that the net present value on this $3,000,000 project was a negative $3,510.

What additional factors would you suggest that your supervisor consider before she makes her report recommending the abandonment of this project?

Solution:

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