Aspen Valley Storage Has 1,800 Units

question 32

Multiple Choice

Aspen Valley Storage has 1,800 units. Each unit is 100 square feet and rents for $100 a month. The firm is considering installing climate-control in 550 of the units, so that those units can be
Used to store items that would be damaged by excessive heat or cold, such as art work. The
Installation is expected to cost $500,000, and Aspen Valley's utility bill is expected to increase
By $3,750 if the conversion takes place. The climate-controlled units are expected to rent for
$130 a month. If the appropriate discount rate is 15%, what is the NPV of the project? Assume
All cash flows are perpetuities. (Note: Be careful to note whether the cash flow is monthly or
Annually when you work this one.)

• A)+$4.92 million
• B)+$1.02 million
• C)+$0.52 million
• D)-$0.48 million

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Definitions:

Vertical Marketing Systems

A coordinated approach to marketing and distribution in which members at different levels of the supply chain work closely together.

Channel Economies

Cost savings realized through efficient distribution channel management, leading to reduced expenses and improved profitability.

Retailer-sponsored Cooperatives

are partnerships formed by retailers to achieve economies of scale through bulk purchasing, marketing, and distribution.

Dual Distribution

A marketing strategy where a company sells products or services through two or more different distribution channels, often simultaneously.