Has Beans inc. operales a chain of lunch shops. The company is considering two possible expansion plans. Plan A would open eight smaler shops at a cost of \$8,740.000. Expected annual nie cash inflows are $1,750,000 with zero residual value at the ent of ten yoars. Under Plan B, Has Beans would open three targer shops at a cost of $8,240,000. This plan is 9xpected to generate cash inflows of $1,450,000 por year for ten years, the estimated life of the properties. Estimated residual value is $1,050,000. Has Beans uses straight-line depreciation and requires an annuat of 8 s. (Click the icon to view the present value annuity facior table.) (Click the icon to view the present value factor table.) (Click the ioon to view the future value annuity factor table.) (Click the icon to view the future value factor table.) Read the teguicements Requirement 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? Begin by computing the payback period for both plans. (Round your answers to one decimal place.) Plan A( (in years) Plan B (in years) Present Value of Annuitv of \$1 Present Value of $1 \begin{tabular}{|l|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 1% & 2% & 3% & 4% & 5% & 6% & 8% & 10% & 12% & 14% & 16% & 18% & 20% \\ \hline Period 1 & 0.990 & 0.980 & 0.971 & 0.962 & 0.952 & 0.943 & 0.926 & 0.909 & 0.893 & 0.877 & 0.862 & 0.847 & 0.833 \\ Period 2 & 0.980 & 0.961 & 0.943 & 0.925 & 0.907 & 0.890 & 0.857 & 0.826 & 0.797 & 0.769 & 0.743 & 0.718 & 0.694 \\ Period 3 & 0.971 & 0.942 & 0.915 & 0.889 & 0.864 & 0.840 & 0.794 & 0.751 & 0.712 & 0.675 & 0.641 & 0.609 & 0.579 \\ Period 4 & 0.961 & 0.924 & 0.888 & 0.855 & 0.823 & 0.792 & 0.735 & 0.683 & 0.636 & 0.592 & 0.552 & 0.516 & 0.482 \\ Period 5 & 0.951 & 0.906 & 0.863 & 0.822 & 0.784 & 0.747 & 0.681 & 0.621 & 0.567 & 0.519 & 0.476 & 0.437 & 0.402 \\ Period 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 \\ Period 7 & 0.933 & 0.871 & 0.813 & 0.760 & 0.711 & 0.665 & 0.583 & 0.513 & 0.452 & 0.400 & 0.354 & 0.314 & 0.279 \\ Period 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 \\ Period 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 \\ Period 10 & 0.905 & 0.820 & 0.744 & 0.676 & 0.614 & 0.558 & 0.463 & 0.386 & 0.322 & 0.270 & 0.227 & 0.191 & 0.162 \\ Period 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 \\ Period 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 \\ Period 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 \\ Period 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 \\ Period 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 \\ Period 20 & 0.820 & 0.673 & 0.554 & 0.456 & 0.377 & 0.312 & 0.215 & 0.149 & 0.104 & 0.073 & 0.051 & 0.037 & 0.026 \\ Period 25 & 0.780 & 0.610 & 0.478 & 0.375 & 0.295 & 0.233 & 0.146 & 0.092 & 0.059 & 0.038 & 0.024 & 0.016 & 0.010 \\ Period 30 & 0.742 & 0.552 & 0.412 & 0.308 & 0.231 & 0.174 & 0.099 & 0.057 & 0.033 & 0.020 & 0.012 & 0.007 & 0.004 \\ Period 40 & 0.672 & 0.453 & 0.307 & 0.208 & 0.142 & 0.097 & 0.046 & 0.022 & 0.011 & 0.005 & 0.003 & 0.001 & 0.001 \\ \hline \end{tabular} Reference \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{12}{|c|}{ Future W of \$1 } \\ \hline Periods & 1% & 2% & 3% & 4% & 5% & 6% & 8% & 10% & 12% & 14% & 16% & 18% & 20% \\ \hline Period 1 & 1.010 & 1.020 & 1.030 & 1.040 & 1.050 & 1.060 & 1.080 & 1.100 & 1.120 & 1.140 & 1.160 & 1.180 & 1.200 \\ Period 2 & 1.020 & 1.040 & 1.061 & 1.082 & 1.103 & 1.124 & 1.166 & 1.210 & 1.254 & 1.300 & 1.346 & 1.392 & 1.440 \\ Period 3 & 1.030 & 1.061 & 1.093 & 1.125 & 1.158 & 1.191 & 1.260 & 1.331 & 1.405 & 1.482 & 1.561 & 1.643 & 1.728 \\ Period 4 & 1.041 & 1.082 & 1.126 & 1.170 & 1.216 & 1.262 & 1.360 & 1.464 & 1.574 & 1.689 & 1.811 & 1.939 & 2.074 \\ Period 5 & 1.051 & 1.104 & 1.159 & 1.217 & 1.276 & 1.338 & 1.469 & 1.611 & 1.762 & 1.925 & 2.100 & 2.288 & 2.488 \\ Period 6 & 1.062 & 1.126 & 1.194 & 1.265 & 1.340 & 1.419 & 1.587 & 1.772 & 1.974 & 2.195 & 2.436 & 2.700 & 2.986 \\ Period 7 & 1.072 & 1.149 & 1.230 & 1.316 & 1.407 & 1.504 & 1.714 & 1.949 & 2.211 & 2.502 & 2.826 & 3.185 & 3.583 \\ Period 8 & 1.083 & 1.172 & 1.267 & 1.369 & 1.477 & 1.594 & 1.851 & 2.144 & 2.476 & 2.853 & 3.278 & 3.759 & 4.300 \\ Period 9 & 1.094 & 1.195 & 1.305 & 1.423 & 1.551 & 1.689 & 1.999 & 2.358 & 2.773 & 3.252 & 3.803 & 4.435 & 5.160 \\ Period 10 & 1.105 & 1.219 & 1.344 & 1.480 & 1.629 & 1.791 & 2.159 & 2.594 & 3.106 & 3.707 & 4.411 & 5.234 & 6.192 \\ Period 11 & 1.116 & 1.243 & 1.384 & 1.539 & 1.710 & 1.898 & 2.332 & 2.853 & 3.479 & 4.226 & 5.117 & 6.176 & 7.430 \\ Period 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 \\ Period 13 & 1.138 & 1.294 & 1.469 & 1.665 & 1.886 & 2.133 & 2.720 & 3.452 & 4.363 & 5.492 & 6.886 & 8.599 & 10.699 \\ Period 14 & 1.149 & 1.319 & 1.513 & 1.732 & 1.980 & 2.261 & 2.937 & 3.797 & 4.887 & 6.261 & 7.988 & 10.147 & 12.839 \\ Period 15 & 1.161 & 1.346 & 1.558 & 1.801 & 2.079 & 2.397 & 3.172 & 4.177 & 5.474 & 7.138 & 9.266 & 11.974 & 15.407 \\ Period 20 & 1.220 & 1.486 & 1.806 & 2.191 & 2.653 & 3.207 & 4.661 & 6.727 & 9.646 & 13.743 & 19.461 & 27.393 & 38.338 \\ Period 25 & 1.282 & 1.641 & 2.094 & 2.666 & 3.386 & 4.292 & 6.848 & 10.835 & 17.000 & 26.462 & 40.874 & 62.669 & 95.396 \\ Period 30 & 1.348 & 1.811 & 2.427 & 3.243 & 4.322 & 5.743 & 10.063 & 17.449 & 29.960 & 50.950 & 85.850 & 143.371 & 237.376 \\ Period 40 & 1.489 & 2.208 & 3.262 & 4.801 & 7.040 & 10.286 & 21.725 & 45.259 & 93.051 & 188.884 & 378.721 & 750.378 & 1.469 .772 \\ \hline \end{tabular} Print Done Requirements 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 Has Beans choose? Why? 3. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? Has Beans inc. operates a chain of lunch shops. The company is conaibering two possible exparsion plans. Plan A would open eight smaller sheps at a cost of 58,740,600. Eixpected annual net cath inflows are $1,750.000 with zero residual value at the end of ten years. Under Plan 8 , Has Beane would open three largor ahopt at a cost of 58,240,000. This plan is expected to generate net cash infows of $1,450,000 per year for teo years, the estimated Hfe of ene propertes. Estimated residual value is $1,050,000. Has Boars uses straight-ine depreciafich and requires an annual retute of 3 . (Cick the icon so view the reasent value annuity factor tibble) (Cikk the icon to vew the present value factor table.) (Cick the ioon to view the fature value annuly tactor table.) (Cick the icon so view the future vilue factor tabie.) Read the Requirement 1. Compute the pryback period, the AFR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgoting models? Begin by computing the paybock period for both plans. (Round your answers so one decimal place) Pian A (in years) Pian B (in years)