Home Grown Company Home Grown Company is a chain of grocery stores that are similar to indoor farmer's markets, providing fresh, local produce, meats, anli dairy products to consumers in urban areas, Home Grown is considering opening several stores in a new city, and has proposals from three contractors (Alpha, Beta, and Gamma companies) who would like to provide buildings for the new stores, The amount of expected revenue from the stores will depend on the desion of the contractor. For example, il Home Grown decides on a more open floor plan, with less shelf space for products, revenue would be lower overall. However, it HomeGrown decides on a very crowded floor plan, it may lose customers who appreciate a more open feel As the project manager for Home Grown, you are responsible for deciding which if any of the proposals to accept Home Grown's minimum acceptable rate of return is 20%. You receive the following data from the three contractors: Initial Cost Residual Proposal Type of Floor Plan if Selected Value pha Very open, like an Indoor farmer's market $1,472,000 $0.00 Standard grocery shelving and layout, minimalisle space 5,678,900 Gamma Mix of open areas and shelving areas 2.125,560 0,00 You have computed time of annual cash flows and sergeamual income from customers for each of the three contractors plans. You believe that the annual cash flows will be us for ach of the 10 years for which you are preparing your containment in your condicions are med in the wine table 0.00 Estimated Average Annual Cash Flow Estimated Average Annual Income Proposal (after depreciation) Alpha $313,094 Beta 272,019 Gamma -521,931 Method Comparison $351,145 461,411 598,133 Compare methods of capital investment analysis in the following table to begin your evaluation of the three capital investment proposals Alpha, Beta, and Gamma. You decide to compare tour methods: the average rate of retur, cash payback period, net present valut, and internal rate of return methods Average Rate of Return Method Cash Payback Method Net Present Value Method Internal Return Considers the value of nondy Does not consider the time value of money to come Not to compute Directly considers expected cash flows Orectly considers tining otected cash flows su cashows can be reinvested a minimum desired rate of totum You begin by trying to eliminate any proposals that are not yielding the company's minimum required rate of return of 20%. Complete the following table, and decide whether Alpha, Beta, and/or Gamma should be eliminated because the average rate of return of their project is less than the company's minimum required rate of return. Complete the following table. Enter the average rates of return as percentages rounded to two decimal places. Estimated Average Average Average Rate Accept or Proposal Annual Income Investment of Return Reject 96 Alpha Beta Gamma Cash Payback Method You've decided to confirm your results from the average rate of return by using the cash payback method Using the following table, compute the cash payback period of wach investment. If required, round the number of years in the cash payback period to wholmber Annual Net Casli Payback Proposal Initial Cost Cash Inflow Period in Years Aloha Beta Gm Even though you're tally certain that your evaluation and elimination is correct, you would like to comparo the three proposals using the net present value method, and get some data about the internal rate of return of the proposats, each of which are expected to generate their respective annual net cash inflows for a period of 10 years. Compute the net procent value of each proposal. You may need the following partial table of factors for present value of an annuity of $1. Round the present value of ammual net cash flows to the nearest dollar If your answer la zero enteros. For the pet present value if required, use the minus sion (-) to indicate a negative amount Present Value of an Annuity of $1 at Compound Interest (Partial Table) 10% Year 2015 1 0.900 0.633 5 3.791 2.991 4.192 10 6.145 Alpha Beta Gamma Anual net cash flow Present value factor Pre Value of annual net cash flow amount to be waste Titresent value Final Questions After reviewing all your data, answer the following questions (1)-(3). 1. What can you say about each proposal? Internal Rate Proposal of Return Alpha Beta Gamma 2. What can you say about these proposals? a. Home Grown would be breaking even (I.e., profit = 0) If Alpha's proposal is chosen. b. Only Gamma's proposal is yielding more than Homegrown's minimum desired rate of return C. Gamma's proposal is the only proposal that would be acceptable to Homegrown. 3. Which proposal is the best choice for Home Grown given the data collected