Stobo plc is a well-known national chain of high-street chemists. Its traditional markets of pharmaceuticals and beauty products are becoming increasingly competitive due to the aggressive entry of certain supermarkets. To counter this, it is considering expanding its services to the public. It plans to make more effective use of some of its retail space and storerooms by introducing some sort of personal healthcare service. A few stores have been chosen in specially selected locations for a five-year pilot scheme. Stobo intends to choose one of the three following alternative possibilities:SR....................................... Stress relief, including aromatherapy, massage and reflexologyOHC................................... Oral hygiene and chiropodyPF....................................... Personal fitness using multigym equipmentEach of these would involve an initial cash outlay on appropriate equipment and the employment of specialist personnel. Market research and a financial analysis have been carried out for each alternative; an extract of the findings is shown below.

Tasks:1. Calculate the payback period for each alternative.2. Calculate the net present value of each alternative if Stobo’s cost of capital is 10%.3. Advise Stobo which of the three alternatives it should concentrate on.