Requirements 1. Compute the payback​ period, the​ ARR, and the NPV of these two plans. What are the strengths and weakne

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Requirements
1.
Compute the payback​ period, the​ ARR, and the NPV of
these two plans. What are the strengths and weaknesses of these
capital budgeting​ models?
2.
My Bean
3.
Estimate Plan​ A's IRR. How does the IRR compare with
the​ company's required rate of​ return?

Requirements 1 Compute The Payback Period The Arr And The Npv Of These Two Plans What Are The Strengths And Weakne 1 (47.93 KiB) Viewed 38 times

Requirements 1 Compute The Payback Period The Arr And The Npv Of These Two Plans What Are The Strengths And Weakne 2 (163.72 KiB) Viewed 38 times

My Bean Inc. operates a chain of lunch shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,640,000. Expected annual net cash inflows are $1,700,000 with zero residual value at the end of ten years. Under Plan B, My Bean would open three larger shops at a cost of $8,440,000. This plan is expected to generate net cash inflows of $1,050,000 per year for ten years, the estimated life of the properties. Estimated residual value is $1,025,000. My Bean uses straight-line depreciation and requires an annual return of 6%.
Future Value of $1 Periods 1% 3% 4% 5% 6% 8% 12% 14% 16% 18% 20% 2% Period 1 1.010 1.020 1.030 1.040 1.050 1.060 1.080 10% 1.100 1.166 1.210 1.254 1.120 1.140 1.160 1.180 1.200 Period 2 1.124 1.346 1.392 1.440 1.020 1.040 1.061 1.082 1.103 1.030 1.061 1.093 1.125 1.158 Period 3 1.191 1.561 1.643 1.728 1.300 1.260 1.331 1.405 1.482 1.360 1.464 1.338 1.469 1.611 Period 4 1.126 1.170 1.216 1.262 1.574 1.689 1.811 1.939 2.074 1.041 1.082 1.051 1.104 Period 5 1.159 1.217 1.276 1.762 1.925 2.100 2.288 2.488 Period 6 1.126 1.194 1.265 2.986 1.062 1.072 1.149 1.340 1.419 1.407 1.504 1.587 1.772 1.714 1.949 1.974 2.195 2.436 2.700 2.211 2.502 2.826 3.185 Period 7 1.230 3.583 Period 8 1.083 1.172 4.300 1.316 1.267 1.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 3.759 1.305 1.423 1.551 1.689 1.999 2.358 2.773 3.252 3.803 4.435 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 5.234 Period 9 5.160 1.094 1.195 1.105 1.219 1.344 Period 10 6.192 Period 11 6.176 7.430 Period 12 1.116 1.243 1.384 1.539 1.710 1.898 1.127 1.268 1.426 1.601 1.796 2.012 1.886 2.133 7.288 8.916 2.332 2.853 3.479 4.226 5.117 2.518 3.138 3.896 4.818 5.936 2.720 3.452 4.363 5.492 6.886 2.937 6.261 7.988 10.147 Period 13 1.138 1.294 8.599 10.699 1.469 1.665 1.513 1.732 Period 14 1.149 1.319 1.980 2.261 3.797 4.887 12.839 Period 15 1.161 1.346 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 Period 20 1.220 1.486 1.806 2.191 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 Period 25 1.282 1.641 2.094 2.666 3.386 Period 30 1.348 1.811 2.427 3.243 4.322 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1,469.772 Period 40 1.489 2.208 3.262 4.801 7.040
Present Value of $1 Periods 1% 2% 3% 20% Period 1 0.990 0.980 0.909 12% 14% 16% 18% 0.893 0.877 0.862 0.847 0.769 0.743 0.718 0.833 Period 2 0.980 0.961 0.826 0.797 0.694 Period 3 0.971 0.915 0.889 4% 5% 6% 8% 10% 0.971 0.962 0.952 0.943 0.926 0.943 0.925 0.907 0.890 0.857 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 0.335 0.942 0.864 0.924 0.888 0.855 0.823 0.840 Period 4 0.961 0.792 Period 5 0.951 0.906 Period 6 0.942 0.888 0.837 0.564 0.507 0.456 0.410 0.370 0.452 0.400 0.354 0.314 Period 7 0.933 0.871 0.813 0.279 Period 8 0.790 0.746 0.705 0.630 0.760 0.711 0.665 0.583 0.923 0.853 0.789 0.731 0.677 0.627 0.540 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 Period 10 0.744 0.676 0.614 0.558 0.527 0.557 0.497 0.513 0.467 0.404 0.351 0.305 0.266 0.233 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.191 0.162 0.905 0.820 0.463 0.386 0.322 0.270 0.227 0.429 0.350 0.195 0.162 0.135 0.650 0.585 0.625 0.287 0.319 0.257 0.237 0.208 0.168 0.137 0.397 0.112 Period 11 0.896 0.804 0.722 Period 12 0.887 0.788 0.701 Period 13 0.879 0.773 0.681 0.870 0.758 0.661 0.577 0.601 0.530 0.469 Period 14 0.505 0.442 0.642 0.555 0.481 0.417 0.315 0.239 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.340 0.263 0.205 0.160 0.125 0.099 0.078 0.183 0.140 0.108 0.084 Period 15 0.861 0.743 0.065 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.149 0.092 0.059 0.038 Period 25 0.780 0.610 0.478 0.375 0.295 0.215 0.146 0.099 0.057 0.233 0.104 0.073 0.051 0.037 0.026 0.024 0.016 0.010 0.012 0.007 0.004 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.033 0.020 0.046 0.022 0.011 0.005 0.003 0.001 Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.001
Present Value of Annuity of $1 Periods 1% 3% 4% 5% 18% 20% 2% 0.990 0.980 0.971 0.962 6% 8% 10% 12% 14% 16% 0.943 0.926 0.909 0.893 0.877 0.862 Period 1 0.952 0.847 0.833 Period 2 1.970 1.942 1.605 1.566 1.528 Period 3 2.941 2.884 2.106 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 Period 4 2.589 Period 5 2.991 Period 6 3.498 3.326 5.795 6.728 Period 7 3.812 3.605 Period 8 3.837 Period 9 8.566 8.162 4.031 Period 10 9.471 8.983 4.192 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 4.039 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.303 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 4.833 4.494 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 Period 11 4.656 4.327 Period 12 5.197 4.793 4.439 Period 13 12.134 5.342 4.910 4.533 Period 14 13.004 5.468 5.008 4.611 Period 15 13.865 5.575 5.092 4.675 5.929 5.353 4.870 4.948 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 6.623 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 7.003 6.177 5.517 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 7.105 6.233 5.548 4.979 4.997
Requirement 1. Compute the payback period, the ARR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgeting models? Begin by computing the payback period for both plans. (Round your answers to one decimal place.) Plan A (in years) Plan B (in years)