Homegrown Company Home Grown Company is a chain of grocery stores that are similar to Indoor farmer's markets, providing fresh, local produce, meats, and dairy products to consumers in urban areas. HomeGrawe is considering opening several stores in a new city, and has proposals from the contractors (Alpha, Beta, and Gamma companies) who would like to provide buildings for the new stores. The unidunt et expected revenue from the stores will depend on the design of the contractor. For example. It Homegrown decides on a more upen floor plan, with less shall space for products, revenue would be lower overalt. However if Homegrown decides on a very crowded floor plan, it may lose customers who appreciate a more open feel. As the profect manager for Home Grown, you are responsible for deciding which any of the proposals to accept, Homegrown's minimum acceptable rate of return is 20%. You receive the following data from the three contractors Proposal Initial Cost Residual Type of Floor Plan if Selected Value Very open, like an Indoor farmer's market $1.472,000 10.00 Standard grocery shelving and layout, minimal alle space 5,678,900 Gamma Mis of een wreas and shelving areas 2,125,560 0.00 Bet 0.00 You have computed estimates of annual cash flows and average annual income from customers for each of the three contractors plans. You believe that the annual cash flows will be equal for each of the 10 vart for which you are preparing your capital investment analysis. Your conclusions are presented in the following table Estimated Average Annual Income Estimated Average Proposal (after depreciation) Annual Cash Flow 3313,094 $351,145 Ba 272.015 451.411 Gants 592.810 Average Rate of Return You begin by trying to diminate 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 Alpha Beta Gamma Cash Payback Method mouve dedded 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 each investment. It required, round the number of years in the cash payback period to a whole number, Annual Net Cash Payback Proposal Initial Cost Cash Inflow Period in Years Alpha Beta Net Present Value Even though you really certain that your evaluation and elimination is correct, you would like to compare the three proposals using the net present value method, and get some data about the Internal rate of return of the proposals, each of which are expected to generate their respective annual net cash inflows for a period of 10 years. Compute the net recent vitae of each propetal. You may need the following partial table of factors for present value of an annuity of $1. Raund the present value of annual net cash flows to the nearest tollar. If your answer is zero enter. For the net present value. If required, use the minus sign (-) to indicate a negative amount. Present Value of an Annuity of $1 at Compound Interest (Partial Table) Year 10% 0.909 3.791 2.991 204 0.333 0.145 4.192 Alpha Beta Gam Arnul net shflow Present value factor Procent value of annuale cash flows Amet tested Nature value Final Questions After reviewing all your data, answer the following questions (1)-(3). 1. What can you say about each proposal? Internal Rate of Return Proposal Alpha Beta Gamma 2. What can you say about these proposals? a. HomeGrown 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 HomeGrown given the data collected? Homegrown Company Home Grown Company is a chain of grocery stores that are similar to Indoor farmer's markets, providing fresh, local produce, meats, and dairy products to consumers in urban areas. HomeGrawe is considering opening several stores in a new city, and has proposals from the contractors (Alpha, Beta, and Gamma companies) who would like to provide buildings for the new stores. The unidunt et expected revenue from the stores will depend on the design of the contractor. For example. It Homegrown decides on a more upen floor plan, with less shall space for products, revenue would be lower overalt. However if Homegrown decides on a very crowded floor plan, it may lose customers who appreciate a more open feel. As the profect manager for Home Grown, you are responsible for deciding which any of the proposals to accept, Homegrown's minimum acceptable rate of return is 20%. You receive the following data from the three contractors Proposal Initial Cost Residual Type of Floor Plan if Selected Value Very open, like an Indoor farmer's market $1.472,000 10.00 Standard grocery shelving and layout, minimal alle space 5,678,900 Gamma Mis of een wreas and shelving areas 2,125,560 0.00 Bet 0.00 You have computed estimates of annual cash flows and average annual income from customers for each of the three contractors plans. You believe that the annual cash flows will be equal for each of the 10 vart for which you are preparing your capital investment analysis. Your conclusions are presented in the following table Estimated Average Annual Income Estimated Average Proposal (after depreciation) Annual Cash Flow 3313,094 $351,145 Ba 272.015 451.411 Gants 592.810 Average Rate of Return You begin by trying to diminate 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 Alpha Beta Gamma Cash Payback Method mouve dedded 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 each investment. It required, round the number of years in the cash payback period to a whole number, Annual Net Cash Payback Proposal Initial Cost Cash Inflow Period in Years Alpha Beta Net Present Value Even though you really certain that your evaluation and elimination is correct, you would like to compare the three proposals using the net present value method, and get some data about the Internal rate of return of the proposals, each of which are expected to generate their respective annual net cash inflows for a period of 10 years. Compute the net recent vitae of each propetal. You may need the following partial table of factors for present value of an annuity of $1. Raund the present value of annual net cash flows to the nearest tollar. If your answer is zero enter. For the net present value. If required, use the minus sign (-) to indicate a negative amount. Present Value of an Annuity of $1 at Compound Interest (Partial Table) Year 10% 0.909 3.791 2.991 204 0.333 0.145 4.192 Alpha Beta Gam Arnul net shflow Present value factor Procent value of annuale cash flows Amet tested Nature value Final Questions After reviewing all your data, answer the following questions (1)-(3). 1. What can you say about each proposal? Internal Rate of Return Proposal Alpha Beta Gamma 2. What can you say about these proposals? a. HomeGrown 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 HomeGrown given the data collected