2. The IPO for Sleepless Brownies is successful. Blake and Taylor decide to add additional retail locations and look into buying a chain of 5 small shops in the Midwest. The owner of the chain claims each shop will have cash flows of $250,000 per year, and they will sell the chain for $10 million. Assume cash flows are perpetual and start the year after the sale. a. Suppose the discount rate is 8%, what is the NPV? Should Sleepless Brownies buy the chain? b. Suppose they foresee increase maintenance costs each year so that cashflows decrease by 5% every year? Should Sleepless Brownies buy the chain in this scenario? C. What is the profitability index? d. What is the payback period? e. What is the IRR? f. Blake and Taylor decide to hire SS to conduct additional valuation in the case where i) cash flows are only $200,000 per shop ii) cash flows are $300,000 per shop, and iii) cash flows are the same but the shops will become defunct after 10 years and can be sold for $100,000 each. In which case (if any) would the chain be a good acquisition? g. For each of the scenario above, what is the minimum price the owner of the chain would accept? 2. The IPO for Sleepless Brownies is successful. Blake and Taylor decide to add additional retail locations and look into buying a chain of 5 small shops in the Midwest. The owner of the chain claims each shop will have cash flows of $250,000 per year, and they will sell the chain for $10 million. Assume cash flows are perpetual and start the year after the sale. a. Suppose the discount rate is 8%, what is the NPV? Should Sleepless Brownies buy the chain? b. Suppose they foresee increase maintenance costs each year so that cashflows decrease by 5% every year? Should Sleepless Brownies buy the chain in this scenario? C. What is the profitability index? d. What is the payback period? e. What is the IRR? f. Blake and Taylor decide to hire SS to conduct additional valuation in the case where i) cash flows are only $200,000 per shop ii) cash flows are $300,000 per shop, and iii) cash flows are the same but the shops will become defunct after 10 years and can be sold for $100,000 each. In which case (if any) would the chain be a good acquisition? g. For each of the scenario above, what is the minimum price the owner of the chain would accept