You are opening up a brand new shopping centre. You presently have more potential retail outlets wanting to locate in your centre 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?

Question

Quizplus · Accepted Answer

The profitability index is the most appropriate tool to use in this scenario as it measures the potential profitability of each retail outlet in relation to the size of space allocated to them. This allows for the allocation of space to be optimized in a way that maximizes overall profitability for the shopping centre. The other options, such as IRR, NPV, and payback period, are better suited for evaluating the financial viability of individual investment projects rather than allocating space to retail outlets.

You Are Opening Up a Brand New Shopping Centre