Lajos Company operates a chain of sandwich shops (Click the icon to view additional information.) Read the requirements. Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. Calculate the payback for both plans. (Round your answers to one decimal place, X.X.) = Paybac Plan A Plan B * More Info Requirements The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,440,000. Expected annual net cash inflows are $1,500,000 for 10 years, with zero residual value at the end of 10 years. Under Plan B, Lajos Company would open three larger shops at a cost of $8,250,000. This plan is expected to generate net cash inflows of $1,000,000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan Bis $1,200,000. Lajos Company uses straight-line depreciation and requires an annual return of 7%. 1. Compute the payback, the ARE two plans. 2. What are the strengths and we 3. Which expansion plan should 4. Estimate Plan A's IRR. How do required rate of retum? Print Done (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) x of these two plans. Payback Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans 2. What are the strengths and weaknesses of these capital budgeting methods? 3. Which expansion plan should Lajos Company choose? Why? 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? Print Done 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.811 0.803 0.795 0.788 0.780 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.660 0.647 0.634 0.622 0.610 Present Value of $1 3% 4% 5% 6% 7% 8% 9% 10% 12% 0.971 0.962 0.952 0.943 0.935 0.9260 .917 0.909 0.893 0.943 0.925 0.907 0.890 0.873 0.857 0.8420.826 0.797 0.915 0.8890.864 0.840 0.816 0.794 0.772 0.751 0.712 0.888 0.855 0.8230.792 0.763 0.735 0.708 0.683 0.636 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.507 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.452 0.789 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.404 0.766 0.703 0.6450.5920.544 0.500 0.460 0.424 0.361 0.744 0.676 0.614 0.558 0.508 0.46304220.386 0.322 0.7220.650 0.585 0.527 0.475 0.429 0.388 0.350 0.287 0.701 0.625 0.557 0.497 0.4440.397 0.356 0.319 0.257 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.205 0.642 0.556 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.163 0.605 0.513 0436 0.371 0.317 0.270 0.231 0.198 0.146 0.587 0.494 0.416 0.350 0.296 0.250 0 212 0.180 0.130 0.570 0475 0.396 0.331 0.277 0.232 0.194 0.1640.116 0.554 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.104 0.538 0439 0.359 0.294 0242 0.199 0.164 0.135 0.093 0.522 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.083 0.507 | 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.074 0.492 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.066 0.478 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.059 14% 15% 16% 18% 0.877 0.870 0.862 0.847 0.833 0.769 0.756 0.743 0.7180.694 0.675 0.658 0.641 0.609 0.579 0.592 0.572 0.552 0.516 0.482 0.519 | 0.497 0.476 0.437 0.402 0.456 0.432 0.410 0.370 0.335 0.400 0.376 0.354 0.314 0.279 0.351 0.327 0.305 0.266 0.233 0.308 0.284 0.263 0.225 0.194 0.270 0.2470.227 0.191 0.162 0.237 0.215 0.208 0.187 0.168 0.137 0.112 0.1820.163 0.145 0.116 0.093 0.160 0.141 0.125 0.099 0.078 0.140 0.123 0.108 0.084 0.065 0.123 0.107 0.093 0.054 0.108 0.093 0.080 | 0.060 0.045 0.095 0.081 0.069 0.051 0.038 0.083 0.031 0.073 0.061 0.051 0.037 0.026 0.064 0.053 0.044 0.031 0.022 0.056 0.046 0.038 0.026 0.018 0.049 0.040 0.033 0.022 0.043 0.035 0.028 0.019 0.013 0.038 0.030 0.024 0.016 0.010 25 - Periods ConWN Present Value of Ordinary Annuity of $1 1% 3% 2% 4% 5% 6% 20% 9% 10% 12% 14% 16% 15% 18% 0.980 0.971 0.990 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.83 0.893 0.877 0.870 0.8620.847 1.970 1.942 1.859 1.8331.808 1.783 1.759 1.736 1.6901.647 1.52 1.626 1.605 1.566 2.829 2.775 2.723 2.9412.884 2.673 2624 2.577 2.531 2.487 2.402 2.322 2.283 2246 2.174 2.10 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.855 2.798 2.690 2.58 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 3.127 2.99 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.8893.784 3.685 3.498 3.32 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.60 7.652 7.3257.020 6.733 6.463 6.210 5.9715.7475.535 5.335 4.9684.639 4.487 4.344 4.078 3.83 8.566 8.1627.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.03 9.471 8.983 8.530 8.1117.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 4.494 4.19 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5453 5.234 5.029 4.656 4.32 11.255 10.575 9.954 | 9.3858.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 | 5.421 5.197 4.793 4.439 12.134 11.348 10,6359 .9869 .394 8.863 8.3587 .904 7.487 7.103 6.4245,8425.583 5.3424.9104.53 13.004 12.106 11.296 10.5639.899 9.295 8.745 8.244 7.786 7.367 6.628 5.724 5.468 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 1.061 7.606 6.811 6.142 5.847 5.575 5.092 4.67 14.718 13.578 12.561 11.652 10.838 10.1069.447 8.851 8.313 7.824 6.974 6.265 5.954 5.669 5.1624.730 15.562 14 292 13.166 12.166 11.274 10.4779.763 9.122 8.544 8.022 7.1206.373 6.047 5.749 5.222 4.77 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.3728.756 8.2017.250 6.467 6.128 5.818 5.2734.812 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.9 6.550 6.198 5.877 5.316 4.844 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.5147469 6.623 6.259 5.929 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.6497.5626.687 6.312 5.973 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.2019.442 8.772 7.645 6.743 20.456 18.292 16.444 6.3596.011 14.857 13.489 12.303 11.272 5.410 4.909 10.371 9.580 8.883 7.718 6.792 21.243 18.914 16.936 6.399 15.247 13.799 12.550 6.044 11.469 10,529 5.432 4.925 9.707 8.985 7.784 6.835 22.023 6.434 19.523 17.413 15.622 6.073 14.094 12.783 11.654 5.451 10.675 9.8239.077 7.843 6.873 6.464 6.097 5.467 4.948 18 20 21 6 Future Value of $1 Periods 1% 29 4 58 | 7 | 9% 9% | 10% | 12% | 14% | 15% | 1010 | 1.020 | 1.030 11.040 | 1050 | 1060 11.070 1080 | 1.090 | 1.100 110 110|160 | 1.020 | 1.040 1,061 | 1.062 1103 | 1124 | 1.145 | 1.166 | 1.188 | 1210 | 1.254 | 1.300 | 1.323 1.030 | 1.061 | 1.093 | 1.125 | 1158 | 1191 | 1.225 | 1.260 | 1.295 | 1.331 1.405 | 1.462 | 1.521 1.04|| 1.082 | 1.126 | 1170 | 1216 | 1.262 1.31 | 1360 | 1412 | 1.464 | 1.574 1.689 | 1749 1.051 110M 1159 | 1.217 | 1.276 | 1.338 | 1.403 | 1.469 | 1539 | 1.611 | 1762 | 1.925 2.01 1.062 | 1.126 | 1.194 | 1.265 | 1.340 | 1.419 | 1.501 | 1.567 | 1677 1772 |1.974 12.195 | 2313 1.072 | 1.149 | 1.230 | 1.316 | 1407 | 1.504 | 1.606 | 1.714 | 1.828 | 1.949 | 2.211 | 2.502 | 2.660 1.083 | 1.172 | 1.267 | 1.369 | 1.477 | 1.594 | 1.718 | 1.851 | 1993 | 2.144 | 2.476 | 2.853 | 3.059 1.094 | 1195 1.305 | 1.423 | 1.551 1,689 |1.838 | 1.999 2172 | 2.358 | 2.73 13252 |3.518 1.105 1.219 1.344 : 1.480 | 1.629 | 1791 | 1.967 | 2159 | 23672594 13.106 13.70714.046 1.116 1243 | 1,384 | 1.539 | 1710 | 1.898 | 2105 | 2.332 | 2580 | 2.853 | 3.479 | 4226 | 4.652 1127 | 1.268 | 1.426 | 1.601 | 1.796 | 2.012 | 2.252 | 2.518 | 2.813 | 3.138 3.896 | 4.818 | 5.350 1.138 | 1294 | 1.469 1.665 | 1.886 2.133 | 2410 2.720 3.066 | 3.452 | 4.363 | 5492 | 6.153 11.149 | 1319 | 1513 | 1732 1.980 | 2261 | 2579 2.937 13342 | 3.798 | 4,8876261 17.076 1.161 | 1.346 | | 1.556 |1.801 | 2.079 | 2397 | 2759 | 3.172 | 3.642 | 4.177 | 5.474 | 7.136 | 8.137 11.173 | 1373 | 1.873 | 2.183 | 2.540 | 2.952 | 3.426 | 3.970 | 4.595 | 6.130 | 8.137 9.358 | 11M | 1400 1.653 | 1948 | 2.292 | 2.693 | 3.159 | 3.700 | 4.328 | 5.054 16.866 19276 | 10.76 1.1% | 1428 1702 | 2026 | 2407 | 2854 | 3.380 | 3.996 | 4.717 15.560 17.690 | 10.58 | 12 36 1208 | 1.45711.754 | 2.107 | 2.527 3.026 | 3.617 | 4.316 | 5.142 16.116 18.613 | 12.06 | 14 23 1220 | 1.486 | 1.806 | 2.191 | 2.653 3.207 | 3.870 | 4.661 | 5.604 | 6.727 19.646 | 13.74 | 16.37 1.232 | 1.516 | 1.860 | 2.279 | 2.786 | 3400 | 4.141 5.034 | 6.109 | 7.400 | 10.80 | 15.67 18.82 1245 | 1.546 |1.916 | 2370 | 2925 | 3.604 | 4.430 15.437 | 6.659 | 8.140 | 12.10 | 17.86 | 21.64 1257 |1577 | 1.974 | 2465 3.072 3.820 4.741 5.871 | 7258 8.954 | 13.55 | 20.36 | 24.89 1270 | 1608 | 2.033 | 2563 | 3.225 | 4049 | 5.072 6.341 | 7911 19.860 | 15.18 | 23 21| 28.63 | 1.282 | 1641 | 2.094 | 2.666 | 3.366 | 4292 | 5.427 | 6.848 | 8623 | 10.83 | 17.00 | 26 46 | 32.92. o HRBUBEB9%a8838 Periods 4% 5% 6% 10% 4.993 5.101 WN DOVA 16.79 Future Value of Ordinary Annuity of $1 1% 3% 12% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.010 2.020 2.030 2040 2050 2060 2070 2080 2090 2.100 2.120 091 3.122 3.153 3.1843.215 3.246 3.278 3.310 3.374 4.060 4.122 4.184 4.246 4.310 4.375 4.440 4.506 4.573 4.641 4.779 5.204 5.309 5.416 5.526 5.637 5.7515.867 5.985 6.105 6.353 6.152 6.308 6.468 6.633 6.802 6.975 7.1537.336 7.523 7.716 8.115 7.214 7.434 7.6627.898 B.142 8.394 8.654 8.9239.2009.487 10.09 8.286 | 8.583 8.8929.214 9.549 9.897 10.260 10.6411.03 11.44 12.30 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 14.78 10.46 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.19 15.94 17.55 11.57 12.17 12.81 13.49 14.21 14.9715.78 16.65 17.56 18.53 20.65 12.68 13,41 14.19 15.03 15.92 16.87 17.8918.98 20.14 21.38 24.13 13.81 14.68 15.62 16.63 17.71 18.88 20.14 21.50 22.95 24.52 28.03 14.95 15.97 17.09 18.29 19.60 21.02 22.55 24.21 26.02 27.98 32.39 16.10 17.29 18.60 20.02 21.58 23.28 25.13 27.15 29.36 31.77 37.28 17.26 18.64 20.16 21.8223.66 25.67 27.89 30.32 33.00 35.95 42.75 18.43 | 20.01 21.76 23.70 25.84 28.21 30.84 33.75 36.97 19.61 21.41 23.41 25.65 28.13 30.91 34.00 37.45 41.30 45.60 55.75 20.81 22.84 25.12 27.67 30.54 33.76 37 38 | 41.45 | 46.02 51.16 63.44 22.02 24.30 26.87 29.78 33.07 36.79 41.00 45.76 51.16 57.28 72.05 23.24 25.7828.68 31.9735.72 39.99 44.87 50.42 56.76 64.00 81.70 2447 27.30 30.5434.25 38.51 43.39 49.01 55.46 62.87 71.40 92.50 25.72 28.85 32.45 36.62 41.43 | 47.00 53.44 79.54104. 6 26.97 30.42 34.43 39.08 44.50 50.82 58.18 66.76 76.79 88,50 118. 2 28.24 32.03 36.46 41.65 47.73 54.86 63.25 73.1184.70 98.35 133.3 14% 15% 1.000 1.000 2 140 2.150 3.440 3.473 4.921 6.610 6.742 8.536 8.754 10.73 11.07 13.23 13.73 16.09 19.34 20.30 23.04 24.35 27.27 29.00 | 32.0934.35 37.58 43.84 50.98 55.72 59.12 65.08 68.39 75.84 78.97 | 88.21 91.02 102.4 104.8 118.8 120.4 137.6 138.3 159.3 158.7 184.2 181.9 212.8 47.58 40.54 48.88 Periods 4% 5% 6% 10% 4.993 5.101 WN DOVA 16.79 Future Value of Ordinary Annuity of $1 1% 3% 12% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.010 2.020 2.030 2040 2050 2060 2070 2080 2090 2.100 2.120 091 3.122 3.153 3.1843.215 3.246 3.278 3.310 3.374 4.060 4.122 4.184 4.246 4.310 4.375 4.440 4.506 4.573 4.641 4.779 5.204 5.309 5.416 5.526 5.637 5.7515.867 5.985 6.105 6.353 6.152 6.308 6.468 6.633 6.802 6.975 7.1537.336 7.523 7.716 8.115 7.214 7.434 7.6627.898 B.142 8.394 8.654 8.9239.2009.487 10.09 8.286 | 8.583 8.8929.214 9.549 9.897 10.260 10.6411.03 11.44 12.30 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 14.78 10.46 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.19 15.94 17.55 11.57 12.17 12.81 13.49 14.21 14.9715.78 16.65 17.56 18.53 20.65 12.68 13,41 14.19 15.03 15.92 16.87 17.8918.98 20.14 21.38 24.13 13.81 14.68 15.62 16.63 17.71 18.88 20.14 21.50 22.95 24.52 28.03 14.95 15.97 17.09 18.29 19.60 21.02 22.55 24.21 26.02 27.98 32.39 16.10 17.29 18.60 20.02 21.58 23.28 25.13 27.15 29.36 31.77 37.28 17.26 18.64 20.16 21.8223.66 25.67 27.89 30.32 33.00 35.95 42.75 18.43 | 20.01 21.76 23.70 25.84 28.21 30.84 33.75 36.97 19.61 21.41 23.41 25.65 28.13 30.91 34.00 37.45 41.30 45.60 55.75 20.81 22.84 25.12 27.67 30.54 33.76 37 38 | 41.45 | 46.02 51.16 63.44 22.02 24.30 26.87 29.78 33.07 36.79 41.00 45.76 51.16 57.28 72.05 23.24 25.7828.68 31.9735.72 39.99 44.87 50.42 56.76 64.00 81.70 2447 27.30 30.5434.25 38.51 43.39 49.01 55.46 62.87 71.40 92.50 25.72 28.85 32.45 36.62 41.43 | 47.00 53.44 79.54104. 6 26.97 30.42 34.43 39.08 44.50 50.82 58.18 66.76 76.79 88,50 118. 2 28.24 32.03 36.46 41.65 47.73 54.86 63.25 73.1184.70 98.35 133.3 14% 15% 1.000 1.000 2 140 2.150 3.440 3.473 4.921 6.610 6.742 8.536 8.754 10.73 11.07 13.23 13.73 16.09 19.34 20.30 23.04 24.35 27.27 29.00 | 32.0934.35 37.58 43.84 50.98 55.72 59.12 65.08 68.39 75.84 78.97 | 88.21 91.02 102.4 104.8 118.8 120.4 137.6 138.3 159.3 158.7 184.2 181.9 212.8 47.58 40.54 48.88