Alternative capital investments

The investment committee of Auntie M$\text{'}$s Restaurants Inc. is evaluating two restaurant

sites. The sites have different useful lives, but each requires an investment of $$900,000.$

The estimated net cash flows from each site are as follows:

The committee has selected a rate of $20\%$ for purposes of net present value analysis. It

also estimates that the residual value at the end of each restaurant's useful life is $$0,$ but

at the end of the fourth year, Wichita's residual value would be $$500,000.$

Present Value of an Annuity of $$1$ at Compound Interest

For each site, compute the net present value. Use the present value of an annuity of

$$1$ table above. Ignore the unequal lives of the projects. If required, round to the

nearest dollar.

For each site, compute the net present value, assuming that Wichita is adjusted to a

four$-$year life for purposes of analysis. Use the present value of $$1$ table above. If