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Limes Company operates a chain of sandwich shopt. EB. (Click the ioon to vew Present Vilue of \$s tatio.) Requirement 1. Compute the payback, the ARR, the NPV, and the proftability index of these two plant. Calculate the payback for both pians. (Round your answers to one decimal place, ) Enter any factor amounts to three secimal places, . Use parentheses of a minus sign for a negative not present value.) parentheses or a mints nign for a negative not present vakie.) Limes Company operates a chain of sandwich shops. (Click the icon to view Present Vablue of 51 table) parentheses or a minus sign for a negative net present value.) Requirement 2. What are the strengths and woaknosses of these cepial budgeling methodi? Match the term with the strengths and weaknessns listed for each of the four capital budgeting models Casital Budgeting Methed Strengths Weaknesses of Capital Budgeting Method is besed on cash flows, can be used to assess proftatility. and tokna nto hcoount the time value of money. It has none of the weakrestes of the othar models. Is easy to understand, is based on cash fosss, and highlynits riska. Requirement 2. What are the strengths and weaknesses of these capital budgeting mehods? Match the term with the stranathie now Requirement 3. Which exparsion plan should Limes Company choose? Why? Limes Company should invest in because it has a payback period, a ARR, a present value, and a Requirement 4. Estimate Plan A's iRR. How does the IFR compare with the company's required rale of return? The IRR (internal rate of return) of Plan A is between This rate the company's hurdle rate of 9%. More info The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,550,000. Expected annual net cash inflows are $1,600,000 for 10 years, with zero residual value at the end of 10 years. Under Plan B, Limes Company would open three larger shops at a cost of $8,100,000. This plan is expected to generate net cash inflows of $1,000,000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan B is $1,300,000. Limes Company uses straight-line depreciation and requires an annual return of 9%. Present Value of $1 Reference ant 4 Fithura Valita of Orelinars A nnultu af e1 re Value of re Value of ro balances