Calculate payback period, net present value, internal rate of return and simple rate of return. Based on the info, determine which restaurant is more profitable to open.

 

Initial Investment: Annual cash inflows: Annual cash outflows: Annual non-cash (all depreciation) expenses: Use straight line depreciation to find! # of years of expected useful life of project: For both, assume no residual value Discount rate Restaurant 1 4000000 $1,000,000 $600,000 25 5% Restaurant 2 4000000 $1,200,000 $850,000 30 5%