O'Mally Department Stores Is Considering Two Possible Expansion Plans

question 97

Multiple Choice

O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,850,000. Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of $2,600,000. The following information is available: The net present value of the Kentucky proposal is closest to:
Present Value of $1
Present Value of Annuity of $1

• A)$2,296,700.
• B)$2,316,000.
• C)$2,335,300.
• D)$4,935,300.

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Definitions:

Manufacturer Orders

Requests or instructions sent to a factory or producer for the creation or supply of goods, indicating the quantity and specifications desired.

Incentive Obstacles

Challenges associated with designing incentive schemes that effectively motivate employees or stakeholders.

Product Availability

The extent to which a product can be purchased or obtained at the time a customer is ready to buy.

Bullwhip Effect

A phenomenon in supply chains where small fluctuations in consumer demand cause progressively larger fluctuations in demand at wholesalers and manufacturers.