FIN 375 Week 4 Selecting a Business Location

Purpose of Assignment

Successful small business owners look to others for counsel on important business decisions. In this assignment you will work with your in-class counsel (learning team) to come up with ideas, calculate risks, and contemplate opportunities related to choosing a location for your business operations.

Your company is thinking about purchasing a small, successful business. You have two choices: Small Business A or Small Business B. The purchase price of each business is $250,000 (and you cannot spend more than that, so acquiring both is not an option).

Review the following data:

Small Business A:

Revenue = $100,000 in year one, increasing by 10% each year.

Expenses = $20,000 in year one, increasing by 15% each year.

Depreciation Expense = $5,000 each year.

Tax Rate = 25%

Discount Rate = 10%

Small Business B:

Revenue = $150,000 in year one, increasing by 8% each year.

Expenses = $60,000 in year one, increasing by 10% each year

Depreciation Expense = $10,000 each year

Tax Rate = 25%

Discount Rate = 11%

Assignment Steps

Identify the key factors to be considered when it comes to choosing a business location.

Analyze how models such as Reilly’s Law of retail gravitation can affect understanding the competition and financial success.

Create a team presentation of 25 slides in total with appropriate references in which you outline the key factors you used to select a business location. Explain why the choice of location can make or break a business, and analyze how capital budgeting impacts location in both the short and long run.

Click the Assignment Files tab to submit your presentation.

Note: For presentations, you may use any presentation software of your choice  — MS PowerPoint preferred.