Clascoe lnc operates a chain of doughnut shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of 8,740,000 Expected annual net cash rdows are $1,750,000ath zero residual value at the end of ten years Under Plan B, Glascoe would open three larger shops at a cost of $8,640,000 This plan is expected to generate net cash indows of $1,100,000 per year for ten years, the estimated We the properties Estimated res dial value is $1, 100,000 Gilascoe uses straight line deprecution and sequres an arr rebam of 8% (Cick the con to view the presern wkse arnuty tactor table ) Cick the icon to wewthe present vakse factor table) (Ckck the icon to werw the future value ansuity facter table) Read the teaurements (Cick the icon to view the fture value factor table Requirement 1. Compute the payback peried, the ARR, and the NV of these two plans. What are the strengths and weaknesses of these capetal budgpoing medels? Begn by compuating the payback period or both plans (Round your answers to one decimal place Plan A -years Plan B and then el Chck 1 Reference 00 per y 1 0.990 0.98 0.971 0.962 0.92 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 32.941 2.884 2.829 2.775 2.723 2673 2.5772.487 2.402 2.32 2.246 2174 2.106 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2690 2.589 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 0 0 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 7 6.728 6.472 6.230 6,.002 5.786 5.582 5.206 4.868 4.564 4.288 4.039 3.812 3.605 8 7652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4968 4.639 4.344 4.078 3.837 9 8.566 8.62 7.786 .435 7.108 6.802 6247 5.759 .328 .946 4.607 4.303 4.031 10 9,471 8.983 8.530 8.111 7.722 .360 6710 6.145 5.650 5216 4.833 4.494 4.192 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 12 11.255 10.575 .954 9.385 8.863 8.384 7536 6.814 6194 5.660.197 4.793 4.439 13 12134 11.348 10.635 9.9869.394 8.853 904 7.103 6.424 5842 5,.342 4.910 4.533 14 13.004 12.106 11.296 10.563 9.899 9,.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 15 13.865 12.849 11.938 11.118 10380 9,712 8.559 7.606 6.811 6.142 5.575 5.092 4,675 PrintDone Ei 1 Requirements els 1. Compute the payback period, the ARR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgeting models? 2. Which expansion plan should Glascoe choose? Why? 3. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? Done Print Reference 120 104 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 10001.000 1.0001.0001.000 2.010 2.0202.0302.040 2.050 2.060 2.080 2.100 2.120 2.1402.160 2.180 2.200 3 3.030 3.060 309 3.122 3.153 3.184 3.246 3.310 3.3743.440 3.506 3.572 3.640 4 4.060 4.122 4.184 4.2464.310 4375 450664.779 .1 .065.215 5.368 5 5.101 .20 309 5.416 5.526 5.637 867 6.105 6.3536.610 6877 7.154 7.442 6 6.15263086468 6.633 680697 7.336 7.716 8115 8.536 8.977 94429.930 7 | 7.214 | 7.434 | 7.662 | 7.898 | 8.142 8.394 | 8.923 | 9.487 | iO.089 | 10.730 | t.414 | 12.142 | 12.916 8 8.2868 8.892 9.21449897 0.637 11436 12.300 13.233 14.240 15.327 16.499 9369 9.75510.159 1083 1027 11491 12.488 13.579 14.776 16.085 17.519 19.086 20.799 10 10.462 10950 11.464 12006 12.578 13.18114.487 15.93 1759 19.337 21.321 23.521 25.9%9 6 12 12683 13.412 14.192 15.026 15.917 16.870 18.977 21.384 24.133 27.21 3080 34931 39.581 113809 14.680 15,618 16.627 17713 18.882 2149 245239 2.089 36.78642.219 48.497 14 14.947 15,974 17.086 18.292 19.599 21.015 24.215 27.975 32.393 37.581 43.67250.818 59.196 15 16.097 17.293 18.599 20.024 21579 23.276 2712 31.772 37.280 3.842 51.66060.965 72.03s Print Done arch Reference 1 0.9900.980 0.97 0.962 0.9520.943 69 0.893 0.877 0.862 0.847 0.833 2 0.980 0.961 0.943 0.925 0 0.890 0.857 0.8260.797 0.769 0.743 0.718 o.694 30.971 0.942 0.915 0.89 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 4 0.9610.924 0.888 0.855 0.823 0.7920.735 0.683 0.636 0.592 0.552 0.516 0.482 5 0.951 0.9060.863 0.822 0.784 0.747 0.681 0.621 0567 0.519 0.476 0.437 0.402 2 2 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 7 0.933 0.871 0.813 0.760 0.711 0.6650.583 0.513 0.452 0.400 0.354 0.314 0.279 8 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 9 0.914 0.837 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.2270.191 0.162 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 14 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 15 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 5 PrintDone Reference 14% 1.010 1.020 1.030 0050 100 1080 1.100 121140 1.160 1.180 1.200 2 1.0201040 1.061 10821.103 1124 1166 .10 1254 1.300 1.346 1.392 1.440 1.030 | 1.061 | 1.093 | 1.125 | 1.158 | 1.191 | 1.260 1.331 | 1405 | 1482 | 1.561 | 1.643 | 1.728 1041 1082 1.126 1170 1.216 1.262 1360 1464 1574 1689 1.81192.074 5 1.05110 1159 1217 1276 1.338 1469 1611 1.762 1.925 2100 2.288 2488 1.062 | 1.126 | 1.194 | 1.265 | 1.340 | 1.419 | 1.587 | 1.772 | 1.974 | 2.195 | 2426 | 2.7 0 | 2.986 7 1.02149 1.230 1.31 1407 01714 19492.21 2.02 2.8263.18 3.583 8 10831.172 1.267 169 147 15941851 2.14 2476 285373.759 4.30 1.094 1901423 11689 138 2.73 3252803 4.435 5.160 10 1105219 1.344 4801.629 1.791 2159 294 3106707441 .234 6.192 11 1.111.243 1384 1539 1.10 1892332 285 3479 4226 1176.1767.A30 12 | 1.127 | 1.268 | 1.426 | 1.601 | 1.796 | 2.012 | 2.518 | 3.138 3.896 | 4.818 | 5.936 | 7.288 | 8.916 13 1.1381.294 1469 1.665 1.886 2.1332.720 3452 4363 5.492 6.8868599 10.69 1.149 1319 1.513 1.732 1980 2.2612937 37976.61 798 0.147 15 11611346 1558 1.801 2.079 2397 377474 738266 11.974 15.407 Print Done