You Are Opening Up a Brand-New Retail Strip Mall

question 76

Multiple Choice

You are opening up a brand-new retail strip mall.You presently have more potential retail outlets wanting to locate in your mall than you have space available.What is the most appropriate tool to use if you are trying to determine the optimal allocation of your retail space?

• A)IRR
• B)Payback period
• C)NPV
• D)Profitability index

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Definitions:

Exact Simple Interest

Interest calculation method using a 365-day year that does not account for the effect of compounding.

365-Day Year

A method used for calculating interest based upon a calendar year, counting all 365 days (or 366 in a leap year), typically used for more precise financial calculations.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or deposit, based on a simple calculation without compounding.

360-Day Year

An accounting method where the year is assumed to have 360 days, simplifying interest calculation by using 30-day months.