Grinders in operates a chan of doughnutshop The company is considering to powerpoin person would contro costat 58.340.000. Expected area... wale at the end of ten years Under Plan B Orders would entre os con 30.740.000. This is expected to general $100.000 per year for yourse of them reside is $1.000.000 inders in depreciation and requiremos che con to www the presente uity factor) hon viewer Click the love the way the het view there were Read the recent Requirement i Compute the parts period. TeAHR, de Neve te plane. What we are de capital buy! ten by coming the pay period for both part on your own decima) Pan Afin year Pan years NewcomputARN toccounting awam tot been para Mund the peripetere Plan me te www.town A become one www.retro www me we w A Malchowih strength of a buting mode pa utpatry maters is the oneshow can I used to pronto into con the time value of money has one of the wees of the other two madele letrad. is lid on chake However Grinders Inc, operates a chain of doughnut shops. The company is considering two posible expansion plans Plan A would open eight smaller shops at a cost of 8,840.000 Expected annuai net ashindwa value at the end of ten years. Under Plan B, Grinders would open three larger shops at a cost of $8,740,000. This plan is expected to generatoret cash inflows of 51,300.000 per year for ten years, the estimated residual value is $1,000,000. Grinders uses straight-line depreciation and requires an annual return of 6% (Click the icon to view the present value annuity factor table) (Click the icon to view the present valde factor table) (Click the icon to view the future value annuity factor table) Click the icon to view the future value factor table) Read the requirements Text compune une prvinet preservare under een pan begin waran men compute man , pround your answers to nearest wear and the person on top Net present value of Plan A Nel present value of Plans Match the form with the strengths and weaknesses listed for each of the three in budgeting models Strengths and weaknesses Capital budgeting models is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has one of the weaknesses of the other two models Is easy to understand, is based on cash flows, and highlights risks. However, it Ignores profitability and the time value of money, Can be used to profitability, but it ignores the time value of money Requirement 2. Which expansion plan should Grinders choose? Why? Recommendation Invest in has the nel present value. It is payback period Requirement 3. Estimate Plan A's R. How does the IRR compare with the company's required rate of retum? The IRR emal rate of reum) of Plan A is between This rate the company hurdle rate of 8% nsidering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,840,000. Expected e larger shops at a cost of $8,740,000. This plan is expected to generate net cash inflows of $1,300,000 per year and requires an annual return of 6%. (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) with Pian A, then compute Plan B. (Rouna your answers to the nearest wnore dollar and use parentheses or a minus sig * Requirements X of the thrd and takes he other tw nts risks. Hd 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 Grinders choose? Why? 3. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? value of mo se? Why? present value Print Done Yoon porro compare with the company's required rate of return? . Grinders Inc. operates a chain of doughnut shope. The company in considering two possible expansion plans Plan A would open eight mater shops at a cost of $8,540.000 Expected annual re con fow we 1.500.000 winter value at the end of ten years. Under Plan B, Grinders would open the larger shops at a cost of 8,740,000. This plan is expected to generate nel cash flow of 1.300.000 per year for ten years, the stated the ef sa proprietate residual value is $1.000.000. Genders uses straight line depreciation and requires an annual return of 6% Click the icon to view the present value annuity factor table) Click the loon view the petals factor table) (Click the icon to view the future value anuity factor tablo Click the icon to view the future value adora Reference Reference WP VE VAL TI DEI CH 13 9 GE 19 LAT Pied 7 HISE 8.34 Future Value of 10 Period 79 33 IN PI 109101010001400 1060 TOO Tad 200 Pared2 1020 100 100 134 10 120 1254 Period 100 tol 100 1.125 1.15 1200 133 TO 11 Period 1041 1.002 11.10 121 2014 Pieds 1000 1.10 1999 1217 110 2.100 20 11.11 120 142 1.MY 17 110 1092 1.100 1230 13 Pied 1853 1.12 1.26 1471 194 Pated 1091.186 1. 239 2010 24 1996 P10 TS 1213 44 2.18 2:51 P11 1.111 123 1 100 2013 HETEN 118 Period 12 1127 128 Lect 200 201 Pe 13 115812 1.400 11272014 SON Period 14 MO 1513 11 171214092 Period 15 114 115 1. Tom Period 40 1220 1 12200 401 Periods 120 101 102 103 1700 PM 1 2 3 IN 1 12.2010 10:48 Future Value of Annuity of 1 Periods 11 25 3 49 0% 10 125 145 204 1800 1000 10000 1.000 1000 1.000 1000 1000 1.000 1000 Period 2 2010 2.020 2030 2040 2050 2060 2000 2100 2.130 2.140 2.950 2.1 2200 Period 3000 36001001 3122 3.153 1194 320 3.310 331 3.600 3.500 1572 3645 Period 4 4000 4.122414 4240 4310 4371 4 471 42 5. 5 Periods 81115204 500 5:49 4520 5.631 6955 8353 GES 715 Period 6.152.B 8.63 610 6.5M 7716 8.105 . 940 Pod1 1214 7470 8.900 5.467 10 ONO 10.750 129 Period 2013021434) 2.07 10AM 1200 10.233 340 IT 1640 Period 20 124314 9300 9.750 1.150 105 11.02T 175 21.12 Period 10 10.4020111120012578 3181 ABT 13.03 17.8 2351 2150 25733 Period 11 11 S1216012808 13:40 1420 14.972 16.625 18.531 22 23 2171 1 150 31 Pored 12 120811412 1412 1.000 1.917 16 15.47721324153 1721 Period 13110.018 17.12 24 26.020 20 M 42219 1849 65.612 50918 19 Period 144758 1709 1822 18.109 2101524215 272722393 51600 72.00 Paris 11.2000 2001 23.21221m2040 1M od 10 2200 2439 2060 29.73.000 M457572 12.000 01 M Period 25 25400 M44.64 1031333541812 12.90 30 M74100402201402413333.1 1200014256614120 N 005 LOTUS WO EP DEP PS 999 WOW CE