Glascoe 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 58 , 940.000. Expected annual net cash infows are 51,550,000 with zero residual value at the end of ten years. Under Plan B, Glascoe would open three larger shops at a cost of 58,840,000. Th plan is expected to generate net cash inflows of $1,400,000 per year for ten years, the estimated life of the properties, Estimated residual value is $900,000. Glascoe uses: straight -line depreciation and requires an annual return of 10%. (Click the kon to view the present value annuity lactor table.) (Cick the icon to view the future value annuity factor table.) (Click the icon to view the present value factor table) Read the epoirements (Click the icon to viow the fudure value factor table.) Requirement 1. Compule the payback period, the ARR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgeting models? Begin by computing the payback period for both plans. (Riound your arianoris to one docimal place.) Plan A (in yoors) Plan B(inyears) Frow compote the ARR (accountiog rate of rotucn) for both plans (Recind thin percentages th the nearest renth perceloc) Pian f Plan 19 Next compute the NPV (net present value) tnder each plan. Begin with Plan A, then compute Plan B). (Round your answers to the nearest whole dollar and use parentheiges or a minus sign to represent a negative NPV) Maich the term with the strengths and weaknesses fisted for each of the three capilal budgoting modals. Reguirement 2. Which expansion plan should Glascoe choose? Why? Recommendation. Ifvest in It hes the net prosent value it also has a payback period Requirement 3. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? The IRR (internal rate of return) of Plan A is between This rate the company's hurdie rate of 10%