Bibi's Chicken Company

Bibi's Chicken is a fast food takeaway chain. Mr$.$ Bibi started the company $20$ years ago after moving to the UK

from India and his special recipe proved very successful. He now has a chain of $20$ shops supplied from his

commercial kitchens in Bradford around the major town and cities in the north of England. He is now expanding

his business to the lucrative south of England and originally estimated the investment required to set up the

supply chain and outlets will be $1\mathrm{.}6$ million.

He has worked closely with his accountants and they have estimated their revenues in today's cash values as: However, the cost of setting up the shops and supplying them from his commercial kitchens has proved more

expensive than he thought, and he will need to outlay $2,000,000$ for his extended supply chain and outlets.

Task

Assuming a discount rate of $6\%,$ calculate the:

Net present value $($NPV$)$ of Bibi's Chicken Company revenues.

Payback period $($PP$).$

Annual rate of return on Mr Bibi's investment $($ARR$).$

Make a note of your calculations.

Now consider the following questions:

What other considerations might Mr Bibi need to take into account before making the investment?

Should Mr Bibi make the investment? Give reasons for your decision.

Share your answers to questions $4$ and $5$ in the forum.

Later on$,$ please stop by and comment on the posts from two of your peers.