Leches Company operates a chain of sandwich shops Click the icon to view additional information) Read the requirements (Click the icon to view Prese (Click the icon to view Preser (Click the icon to view Future (Click the icon to view Future 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 Leches Company choose? Why? 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? 1% Periods 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.9070890 0.873 0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.6090.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0763 0735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0 666 0.630 0.596 0.564 0.507 0.456 0.432 0.4100 370 0.335 Period 7 0933 08710813 0.7600.711 0665 0.623 0583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0540 0.502 0.467 0.404 0.351 0.327 0.305 0.266 0.233 Period 9 0.914 0.8370.766 0.703 0.6450.592 0544 0.500 0.460 0.4240361 0.308 0.284 0.263 0225 0.194 Period 10 0.905 082007440676 0.6140558 0.508 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 11 0.896 08040.722 06500585 0.527 0.475 0.429 0.388 0.3500 287 0.2370215 0.1960.162 0.135 Period 12 0887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0319 0,257 0208 0.187 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0469 0.415 0368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0 093 Period 14 0.870 0.758 0.661 0.57705050 442 0,388 0.340 0 2990 263 0.205 0.1600.141 0.125 0.099 0.078 Period 15 0861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Period 16 0,853 0.728 0623 0.534 0.458 0394 0339 0.292 0.252 0218 0.163 0.123 0 107 0.093 0.071 0.054 Period 17 0 844 0.7140 605 0.513 0.436 0.371 0,317 0.270 0.2310.1980.146 0.108 0.093 0.080 0.060 0.045 Period 18 0.836 0.7000.587 0.494 0.416 0.350 0.296 0.250 0212 0.1800 1300.095 0.081 0.069 0.051 0.038 Period 19 0828 0,688 0570 0475 0.3960.331 0277 0232 0.194 0.1640.116 0.083 0.070 0.060 0.043 0.031 Period 20 0820 0.673 0554 0.456 0.377 0312 02580215 0.178 0.149 0.1040.073 0.061 0.051 0.037 0.026 Period 21 0 811 0.680 0538 0.439 0359 0294 0242 0.1990.1640.135 0093 0.064 0.053 0.044 0.031 0.022 Period 22 0.803 0.647 0.522 0.422 0.342 02780226 0.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 Period 23 0.795 0634 0.507 0406 0326 0.262 0211 Perind 24 in 2001 Anal 0.1700 1380.112 0.074 | 0.049 0.040 | 0.033 1 0022 015 Ann Present Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.9170 909 0.893 0.877 0.870 0.862 0.8470.833 Period 2 1970 1.942 1.913 1.886 1.859 1.833 1.8081783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.528 Period 3 2.9412.8842.829 2775 2.723 2.673 2624 2.577 2.531 2.487 2.402 2.322 2283 2.246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.3123.240 3.170 3.03729142855 2798 2.690 2589 Period 5 4853 4713 4.580 4.45243294212 4.100 3.9933 890 3.791 3.605 3.433 3.352 3.2743.127 2.991 Period 6 5.795 5.601 5.417 5.2425.076 4.917 4.767 4.623 4.488 4 355 4 111 3.889 3.784 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.3895 206 5033 4.868 45644 288 4160 4.0393.812 3.605 Period 8 7.652 7.325 7020 6.733 6.463 6210 5971 5.7475.535 5.335 4.9684.639 4.487 4.344 4.078 3.837 Period 9 8.566 8.1627786 7435 7.108 6.802 6.515 6.247 5.995 5.759 5328 4.946 4.772 4.607 4.303 4,031 Period 10 9.471 8.983 8530 8.111 7.722 7360 7.0246.710 6.418 6.1455.650 5216 5.019 4.833 44944 192 Period 11 10.368 9.7879 253 8.760 8.306 7887749971396 805 6.4955 938 5.453 5.234 5.029 46564 327 Period 12 11.255 10 575 9.954 9 385 8.863 8.384 7.943 7.5367 161 68146. 1945.660 5.421 5.1974.793 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.3587 904 7487 7 103 6.424 5 842 5583 5.342 4.910 4533 Period 14 13.004 12.106 11 296 105639 899 9.295 8745 8.2447 786 736766286.002 5.724 5.468 5008 4.611 Period 15 13.865 12 849 11.938 11 118 10 380 9.712 9.108 8559 8.06176066811 6.142 58475 575 5.092 4.675 Period 16 14.718 13.578 12 561 11.652 10.838 10.106 9447 8.851 8 313 7.8246.9746265 5.954 5 669 5.1624.730 Period 17 15 562 14 292 13.166 12.186 11.274 10.477 9763 9.122 8.54480227.1206.373 6.047 5749 5222 4.775 Period 18 16 398 14.992 13.75412 659 11 690 10 828 10 059 9.372 8.756 8.2017.250 6.467 6.128 5818 5273 4812 Period 19 17226 15.6781432413.134 12085 11.158 10 336 9 604 8950836573686.550 6.198 5 877 5 316 4.844 Period 20 18.046 16 351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.4696 623 6.259 5.9295353 4.870 Period 21 18.857 1701115.415 14.029 12821 11.764 10 836 10.0179292 8.64975626 687 6.3125973 Period 22 19.660 17658 15.937 14.451 13 16312042 11.061 10 201 94428.772 7 645 6.743 6359 5384 4 891 Period 23 20.456 18 292 16.444 14.857 13.489 12 303 11 272 10371 95808 8837.718 6.792 6399 601154104 909 Period 24 21 243 18.914 16.936 15 247 13 799 12 550 11469 10.529 9707 8.9857.784 6.83564346.073 8.044 5.432 4925 Period 25 22 023 19.523 17.413 15 622 14.094 12783 11 654 10.675 9.8239.077 5451 4937 784368736 464 6.097 5.467 4.948 Period 26 22795 20 121 17 877 15 983 14 375 13 003 11.826 108109.929 9 161 7 QOR AW 2% 7% 9% Periods 1% 3% 4% 5% 6% 8% 10% 12% 14% 15% Period 1 1.010 1.020 1.030 1040 1050 1.060 1070 1080 1.090 1.100 1.120 1.140 1.150 Period 2 1.020 1.040 1.061 1.082 1.103 1.124 1.145 1.166 1.188 1.210 1.254 1.300 1.323 Period 3 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.260 1.295 1.331 1.405 1.482 1.521 Period 4 1.041 1.082 1.126 1.17012161 262 1.311 1.360 1412 1.464 1.574 1.689 1.749 Period 5 1.051 1.104 1159 1.2171276 1338 1.403 1.469 1.539 1.611 1.762 1.925 2011 Period 6 1.062 1.126 1.194 1265 1.340 1.419 1.501 1587 1.677 1.772 1.974 2 195 2 313 Period 7 1.072 1.149 1.230 1316 1.407 1504 1606 1714 1.828 1.949 2.211 2.502 2660 Period 8 1.083 1.172 1.267 1.369 1.4771.594 1.7181.851 1.993 2.144 2.476 2.853 3.059 Period 9 1.094 1.195 1.305 1.4231.551 1689 1.838 1999 2.172 2358 2.7733.252 3.518 Period 10 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2367 2.594 3.106 3.707 4.046 Period 11 1116 1.243 1.384 1539 1.7101.898 2 1052 3322580 2.853 3.4794.226 4652 Period 12 1.127 1.268 1.426 1601 1.796 2012 2252 2518 2.813 3.138 3.896 4.818 5.350 Period 13 1.138 1.294 1.469 1665 1.8862 133 24102.720 3.066 3.452 4.363 5.492 6.153 Period 14 1.149 1.319 15131732 1980 2261 25792.937 3.342 3.798 4.887 6.261 7.076 Period 15 1.161 1 346 1558 18012079 2397 2.759 3.172 3.642 4.177 5.474 7.1388.137 Period 16 1.173 1.373 16051873 2.183 2540 2952 3.426 3.970 4.595 6.130 8.137 9.358 Period 17 1.184 1.400 1653 1.948 2292 2.693 3.159 3.700 4 328 5.054 6.8669 276 10.76 Period 18 1.196 1428 17022026 2407 2854 3.380 3.996 4.717 5.560 7690 10.58 12.38 Period 19 1208 1.457 1.7542 107 2.527 3.026 3.6174316 5.142 6. 116 8.613 12.06 1423 Period 20 1220 1.486 1 806 2.1912.653 3 207 3.870 4.661 5.604 6.727 9.646 13.74 16:37 Period 21 1232 1516 1.860 2279 2786 3.400 4.1415.0346.109 7.400 10.80 15.67 1882 Period 22 1 245 1.546 1.916 2370 2925 3.604 4.430 5.4376.659 8.140 12.10 17.86 2164 Period 23 1.257 1.577 1.9742465 3.072 3 820 4.741 58717258 8.954 13.55 20.36 24 89 Period 24 1270 1.608 2033 2,563 3.225 4.049 5072 6.341 7911 9.850 15.18 23 21 28 63 Period 25 1 282 1.641 2.094 2666 3.386 4 292 5.4276 848 8.623 10.83 17.00 26.46 32.92 Period 26 1.295 1673 2 157 2772 3.556 4549 5 807 7398 9399 1192 19.04 2017 27 Future Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2020 2030 2040 2050 2.060 2.070 2080 2090 2100 2120 2.140 2.150 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 3.215 3.246 3.278 3.310 3.374 3.440 3.473 Period 4 4.060 4.122 4.184 4.246 4.310 4.375 4.440 4.5064.573 4.641 4.779 4.921 4.993 Period 5 5.101 5.2045.309 5.416 5.526 5.637 5.7515.8675.985 6.105 6.353 6.610 6.742 Period 6 6.152 6.308 6.468 6.633 6.802 6.975 7.153 7.336 7.523 7.716 8.115 8.536 8.754 Period 7 7.214 7.4347.662 7898 8.142 8.394 8.654 8.9239.2009.487 10.09 10.73 11.07 Period 8 8.286 8.5838.89292149.549 9.897 10.260 10.64 11.03 11.44 12.30 13.23 13.73 Period 9 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 14.78 16.09 16.79 Period 10 10.46 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.19 15.94 17.55 19.34 20.30 Period 11 11.57 12.17 12.81 13.49 14.21 14.97 1578 16.65 1756 18.53 2065 23.0424.35 Period 12 12.68 13.41 14.19 15.03 15.92 16.87 17.8918.98 20.14 21.3824.13 27 27 29.00 Period 13 13.81 14.68 15.62 16.63 17 71 18.88 20.14 21.50 22.95 24.52 28.03 32.09 34.35 Period 14 14.95 15.97 17.0918.29 19.60 21.02 22.55 24.21 26.02 27.98 3239 37.58 40.50 Period 15 16.10 17.29 18.60 20.02 21.58 23.28 25.13 27.15 29.36 31.77 37 28 43.84 47.58 Period 16 17.26 18.64 20.16 21.82 23.66 25.67 27.89 30.32 | 33.00 35.95 4275 50.98 55.72 Period 17 18.43 20.01 | 21.76 23.70 25.84 28.21 30.84 33.75 36.97 40.54 48.8859.12 65.08 Period 18 19.61 21.4123.41 25.65 28.13 30.91 34.00 37.4541.30 45.60 55.75 68.39 75.84 Period 19 20.81 22.84 25.12 27.67 30.54 33.76 37 38 41.45 46.02 51 16 63.44 78.97 88.21 Period 20 22.02 24 30 26.87 29.78 33.07 36.79 41.00 45.76 51.16 5728 72.05 91,02 1024 Period 21 23 24 25.7828.68 31.97 35.72 39.99 44 87 50.42 56.76 64.00 81.70 104.8 118.8 Period 22 24.47 27 30 30 54 34 25 38.51 43.39 49,01 55.46 62.87 71.40 92 50 120.4 1376 Period 23 25.72 28.8532 45 36.62 41 43 47.00 53.44 60 89 69.53 79.54 104.6 138.3 1593 Period 24 26.97 30.42 34.43 39.08 44.50 50.82 58.18 66.76 76.79 88 50 1182 158.7 1842 Period 25 28.24 32.03 36.46 41.65 47.73 54.86 63.25 73 11 84 70 1995 (Click the icon to view Futur 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, XX.) 10 Payback Plan A 11 years Plan B 11 years Calculate the ARR (accounting rate of return) for both plans (Round your answers to the nearest tenth percent, XX%) ARR Plan A 1111 96 Plan B 96 Gaclulate the NPV (net present value) of each plan Begin by calculating the NPV of Plan A (Complete all answer boxes. Enter a "0" for a apply to the plan Enter any factor amounts to three decimal places, XXXX Use parentheses or a minus sign for a negative net present .... ment 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. ce the payback for both plans. (Round your answers to one decimal place, X.X) ate th Amount invested (Round your answers to the nearest tenth perce Average amount invested Expected annual net cash inflow latett Present value of net cash inflows to the calculating the NPV of Plan A (Complete all ans places, X.XXX. Use parentheses or a minus sign A: Net Cash Annuity PV Factor PV Factor ears (Click the icon e the payback, the ARR, the NPV, and the profitability index of these two plans. both plans. (Round your answers to one decimal place, X.X.) P stom -unting rate of return) for both plans. (R Amount invested X.X%) Average amount invested Expected annual net cash inflow present value) of each plan Begin by G Present value of net cash inflows any factor amounts to three decimal pla er boxes a negat Net Cash Annuity PV Factor PV Factor Present Inflow 170/ Calculate the ARR (accounting rate of return) for both plans. (Round your answers to the nearest tenth percent, X.X%) 11 ARE Plan A Plan B 9 Gaclulate the NPV (net present value) of each plan. Begin by calculating the NPV of Plan A. (Complete all answer boxes. Enter apply to the plan. Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sian for a negative ne the payback for both plans. (Round your answers to one decimal place, ....) e the ARR (accounting rate of return) for both plans. (Round your answers to the nearest tenth per Amount invested ett the calculating the NPV of Plan A. (Complete all Slaces, X.XXX. Use parentheses or a minus si Average amount invested PV Factor Average annual operating income Annuity PV Factor (i=7%, n=10) (i=7%, n=10) 0 Present value of net cash inflows Total PV of cash inflows from any list or enter any number in the innut fint rement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans ate the payback for both plans. (Round your answers to one decimal place, XX) Il Payback A 11 11 B ulate the ARR (accounting rate of retum) for both plans. (Round your answers to the nearest tenth percent, X.X%) ARR % Amount invested clulate the NPV (net present value) of each plan Begin by ca ly to the plan Enter any factor amounts to three decimal pla boxes Enter a "O" for any zero balancesc i negative net present value.) an A Average amount invested Net Cash A Years int Inflow Average annual operating income 1-10 Present value of annuity 10 Present value of residual value TPV och inflows Present value of net cash inflows Choose from any list or enter any number in the input fields and then continue to the next question Time Remaining: 01- o BE (Click the icon to view FL 44 Net present value of Plan B Calculate the profitability index of these two plans (Round to two decimal places XXX) Profitability index Plan A 11 Plan B IE Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the term with the strengths and weaknesses listed for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method is based on cash flows can be used to assess profitability and takes into account the time value of money It has none of the weaknesses of the other models Is easy to understand is based on cash flows, and highlights risks Fir However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models qui Requirement 3. Which expansion plan should Leches Company choose? Why? fect Choose from any list of enter any number in the insidenten dQ Jility Mex of these two plans. (Round to two decimal places X.XX.) Am Average amount invested me hese capital budgeting methods eti Average annual operating income each of the four capital budgeting Bu Initial investment of Capital Budgeting Method an be used to assess profitability, Present value of net cash inflows ?y. It has none of the weaknesses is easy to understana, is based on cash flows, and highlight However, it ignores profitability and the time value of mor Can be used to assess profitability, but it ignores the time va It allows us to compare alternative investments in present val accounts for differences in the investments' initial cost. It has Aan ad the tatements (Click the icon to view Future Value of Ordinary Net present value of Plan B Calculate the profitability index of these two plans. (Round to two decimal places XXX.) Profitability index Plan A Plan B Average amount invested Requirement 2. What are the strengths and weaknesses of ti Match the term with the strengths and weaknesses listed for & Average annual operating income Capital Budgeting Method Strengths/Weaknesses Initial investment is based on cash flows, C count the time value of mone Present value of net cash inflows lels is easy to understand is based on can now, anongnghits SKS However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money. It allows us to compare atemative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models ECT 4 Requirement 3. Which expansion plan should Leches Company choose? Why? Choose from any list or enter any number in the input fields and then continue to the next question O Time Remaining: o search I C: . LENTULUI MIU MIU MIU "WIvy UI MIU MIUI wouyurly term with the strengths and weaknesses listed for each of the four capital budgeting models Budgeting Method Strengths/Weaknesses of Capital Budgeting Method is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. .... yur. MMM ULUMIWww VI wwuuyury IVU Match the term with the strengths and weaknesses listed for each of the four capital budgeting models. Capital Budgeting Method ARR E Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into accc the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money, It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models Net present value Payback method E) Profitability index Fir plan should Leches Company choose? Why? Leches Company should invest in because it has a payback period, a ARR, a Watch the term with the strengths and weaknesses listed for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into accou the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money ARR It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments' initial cost. It has none of the Net present value weaknesses of the other models. Payback method plan should Leches Company choose? Why? Profitability index because it has a payback period, a ARR, a Requirement 4. Estimate Plan A's IRR How does the inn nei hon the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. ARR Net present value plan should Leches Company choose? Why? Payback method because it has a payback period, a ARR, a net Profitability index IRR. How does the IRR compare with the company's required rate of return? Plan A is between money Can be used to assess profitability, but it ignores the time value of money It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. ARR plan should Leches Company choose? Why? Net present value because it has a payback period, a Payback method ARR, a net IRR. How does the IRR compare with the company's required rate of return? Profitability index Plan A is between This rate Leches Company should invest in because it has a payback penod, a ARR, a net present value and a W profitability index Requirement 4. Estimate Puan Als IRR compare with the company's required rate of return? The IRR internate of return of Plan The rate the cd e of 7 Plan B Choose from any list or enter any number in the input fields and then continue to the next question Ed on cash flows, and highlight However, it ignores profitability and the time value of mor n be used to assess profitability, but it ignores the time val allows us to compare alternative investments in present val counts for differences in the investments' initial cost. It has eaknesses of the other models. an should Leches Company choose? Why? because it has a payback period, a RR. How does the IRR CO npany's required rat Plan A is between longer mpany's hurdle rate of 7% shorter number in the input fields and then continue to the next questi (Click the icon to view Future Va (Click the icon to view Future Val wwwwwwwwwww reaknesses listed for each of the four capital budgeting models engths/Weaknesses of Capital Budgeting Method based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models easy to understand, is based on cash flows, and highlights nisks However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money it allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models n plan should Leches Company choose? Why? because it has a payback period, a ARR, a net present value, and a A'SIRR How does the IRR compare with the company's te n? b) of Plan Ais between higher the coman's hude rate of 7% lower y number in the input bolds and then continue to the next question Time Remaining C Oresent value terms and it also cost. It has none of the net present value, anc od, a ARR, a Thing any's required rate of ret higher lower e to the next question. o net present value, and a profitability index. higher lower apital Budgeting Method Strengths/Weaknesses of Ca Is based on cash flows, can be the time value of money. It Is easy to underst However, it ign Can be used to as 8%-9% It allows us to con accounts for differ 9%-10% weaknesses of the Requirement 3. Which expansion plan should Leche: 10%-12% Leches Company should invest in 12%-14% because i Requirement 4. Estimate Plan A's IRR. How does the 14%-15% The IRR (internal rate of return) of Plan A is between m This rate the company's hurdle rate of 7%. Choose from any list or enter any number in the input fields and then account weaknes Requiren shou Leches C b. Requiren does not exceed 2. How c The IRRC exceeds Q A is bet This rate the company's hure ct Leches Company operates a chain of sandwich shops Click the icon to view additional information) Read the requirements (Click the icon to view Prese (Click the icon to view Preser (Click the icon to view Future (Click the icon to view Future 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 Leches Company choose? Why? 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? 1% Periods 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.9070890 0.873 0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.6090.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0763 0735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0 666 0.630 0.596 0.564 0.507 0.456 0.432 0.4100 370 0.335 Period 7 0933 08710813 0.7600.711 0665 0.623 0583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0540 0.502 0.467 0.404 0.351 0.327 0.305 0.266 0.233 Period 9 0.914 0.8370.766 0.703 0.6450.592 0544 0.500 0.460 0.4240361 0.308 0.284 0.263 0225 0.194 Period 10 0.905 082007440676 0.6140558 0.508 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 11 0.896 08040.722 06500585 0.527 0.475 0.429 0.388 0.3500 287 0.2370215 0.1960.162 0.135 Period 12 0887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0319 0,257 0208 0.187 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0469 0.415 0368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0 093 Period 14 0.870 0.758 0.661 0.57705050 442 0,388 0.340 0 2990 263 0.205 0.1600.141 0.125 0.099 0.078 Period 15 0861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Period 16 0,853 0.728 0623 0.534 0.458 0394 0339 0.292 0.252 0218 0.163 0.123 0 107 0.093 0.071 0.054 Period 17 0 844 0.7140 605 0.513 0.436 0.371 0,317 0.270 0.2310.1980.146 0.108 0.093 0.080 0.060 0.045 Period 18 0.836 0.7000.587 0.494 0.416 0.350 0.296 0.250 0212 0.1800 1300.095 0.081 0.069 0.051 0.038 Period 19 0828 0,688 0570 0475 0.3960.331 0277 0232 0.194 0.1640.116 0.083 0.070 0.060 0.043 0.031 Period 20 0820 0.673 0554 0.456 0.377 0312 02580215 0.178 0.149 0.1040.073 0.061 0.051 0.037 0.026 Period 21 0 811 0.680 0538 0.439 0359 0294 0242 0.1990.1640.135 0093 0.064 0.053 0.044 0.031 0.022 Period 22 0.803 0.647 0.522 0.422 0.342 02780226 0.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 Period 23 0.795 0634 0.507 0406 0326 0.262 0211 Perind 24 in 2001 Anal 0.1700 1380.112 0.074 | 0.049 0.040 | 0.033 1 0022 015 Ann Present Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.9170 909 0.893 0.877 0.870 0.862 0.8470.833 Period 2 1970 1.942 1.913 1.886 1.859 1.833 1.8081783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.528 Period 3 2.9412.8842.829 2775 2.723 2.673 2624 2.577 2.531 2.487 2.402 2.322 2283 2.246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.3123.240 3.170 3.03729142855 2798 2.690 2589 Period 5 4853 4713 4.580 4.45243294212 4.100 3.9933 890 3.791 3.605 3.433 3.352 3.2743.127 2.991 Period 6 5.795 5.601 5.417 5.2425.076 4.917 4.767 4.623 4.488 4 355 4 111 3.889 3.784 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.3895 206 5033 4.868 45644 288 4160 4.0393.812 3.605 Period 8 7.652 7.325 7020 6.733 6.463 6210 5971 5.7475.535 5.335 4.9684.639 4.487 4.344 4.078 3.837 Period 9 8.566 8.1627786 7435 7.108 6.802 6.515 6.247 5.995 5.759 5328 4.946 4.772 4.607 4.303 4,031 Period 10 9.471 8.983 8530 8.111 7.722 7360 7.0246.710 6.418 6.1455.650 5216 5.019 4.833 44944 192 Period 11 10.368 9.7879 253 8.760 8.306 7887749971396 805 6.4955 938 5.453 5.234 5.029 46564 327 Period 12 11.255 10 575 9.954 9 385 8.863 8.384 7.943 7.5367 161 68146. 1945.660 5.421 5.1974.793 4.439 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.3587 904 7487 7 103 6.424 5 842 5583 5.342 4.910 4533 Period 14 13.004 12.106 11 296 105639 899 9.295 8745 8.2447 786 736766286.002 5.724 5.468 5008 4.611 Period 15 13.865 12 849 11.938 11 118 10 380 9.712 9.108 8559 8.06176066811 6.142 58475 575 5.092 4.675 Period 16 14.718 13.578 12 561 11.652 10.838 10.106 9447 8.851 8 313 7.8246.9746265 5.954 5 669 5.1624.730 Period 17 15 562 14 292 13.166 12.186 11.274 10.477 9763 9.122 8.54480227.1206.373 6.047 5749 5222 4.775 Period 18 16 398 14.992 13.75412 659 11 690 10 828 10 059 9.372 8.756 8.2017.250 6.467 6.128 5818 5273 4812 Period 19 17226 15.6781432413.134 12085 11.158 10 336 9 604 8950836573686.550 6.198 5 877 5 316 4.844 Period 20 18.046 16 351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.4696 623 6.259 5.9295353 4.870 Period 21 18.857 1701115.415 14.029 12821 11.764 10 836 10.0179292 8.64975626 687 6.3125973 Period 22 19.660 17658 15.937 14.451 13 16312042 11.061 10 201 94428.772 7 645 6.743 6359 5384 4 891 Period 23 20.456 18 292 16.444 14.857 13.489 12 303 11 272 10371 95808 8837.718 6.792 6399 601154104 909 Period 24 21 243 18.914 16.936 15 247 13 799 12 550 11469 10.529 9707 8.9857.784 6.83564346.073 8.044 5.432 4925 Period 25 22 023 19.523 17.413 15 622 14.094 12783 11 654 10.675 9.8239.077 5451 4937 784368736 464 6.097 5.467 4.948 Period 26 22795 20 121 17 877 15 983 14 375 13 003 11.826 108109.929 9 161 7 QOR AW 2% 7% 9% Periods 1% 3% 4% 5% 6% 8% 10% 12% 14% 15% Period 1 1.010 1.020 1.030 1040 1050 1.060 1070 1080 1.090 1.100 1.120 1.140 1.150 Period 2 1.020 1.040 1.061 1.082 1.103 1.124 1.145 1.166 1.188 1.210 1.254 1.300 1.323 Period 3 1.030 1.061 1.093 1.125 1.158 1.191 1.225 1.260 1.295 1.331 1.405 1.482 1.521 Period 4 1.041 1.082 1.126 1.17012161 262 1.311 1.360 1412 1.464 1.574 1.689 1.749 Period 5 1.051 1.104 1159 1.2171276 1338 1.403 1.469 1.539 1.611 1.762 1.925 2011 Period 6 1.062 1.126 1.194 1265 1.340 1.419 1.501 1587 1.677 1.772 1.974 2 195 2 313 Period 7 1.072 1.149 1.230 1316 1.407 1504 1606 1714 1.828 1.949 2.211 2.502 2660 Period 8 1.083 1.172 1.267 1.369 1.4771.594 1.7181.851 1.993 2.144 2.476 2.853 3.059 Period 9 1.094 1.195 1.305 1.4231.551 1689 1.838 1999 2.172 2358 2.7733.252 3.518 Period 10 1.105 1.219 1.344 1.480 1.629 1.791 1.967 2.159 2367 2.594 3.106 3.707 4.046 Period 11 1116 1.243 1.384 1539 1.7101.898 2 1052 3322580 2.853 3.4794.226 4652 Period 12 1.127 1.268 1.426 1601 1.796 2012 2252 2518 2.813 3.138 3.896 4.818 5.350 Period 13 1.138 1.294 1.469 1665 1.8862 133 24102.720 3.066 3.452 4.363 5.492 6.153 Period 14 1.149 1.319 15131732 1980 2261 25792.937 3.342 3.798 4.887 6.261 7.076 Period 15 1.161 1 346 1558 18012079 2397 2.759 3.172 3.642 4.177 5.474 7.1388.137 Period 16 1.173 1.373 16051873 2.183 2540 2952 3.426 3.970 4.595 6.130 8.137 9.358 Period 17 1.184 1.400 1653 1.948 2292 2.693 3.159 3.700 4 328 5.054 6.8669 276 10.76 Period 18 1.196 1428 17022026 2407 2854 3.380 3.996 4.717 5.560 7690 10.58 12.38 Period 19 1208 1.457 1.7542 107 2.527 3.026 3.6174316 5.142 6. 116 8.613 12.06 1423 Period 20 1220 1.486 1 806 2.1912.653 3 207 3.870 4.661 5.604 6.727 9.646 13.74 16:37 Period 21 1232 1516 1.860 2279 2786 3.400 4.1415.0346.109 7.400 10.80 15.67 1882 Period 22 1 245 1.546 1.916 2370 2925 3.604 4.430 5.4376.659 8.140 12.10 17.86 2164 Period 23 1.257 1.577 1.9742465 3.072 3 820 4.741 58717258 8.954 13.55 20.36 24 89 Period 24 1270 1.608 2033 2,563 3.225 4.049 5072 6.341 7911 9.850 15.18 23 21 28 63 Period 25 1 282 1.641 2.094 2666 3.386 4 292 5.4276 848 8.623 10.83 17.00 26.46 32.92 Period 26 1.295 1673 2 157 2772 3.556 4549 5 807 7398 9399 1192 19.04 2017 27 Future Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2020 2030 2040 2050 2.060 2.070 2080 2090 2100 2120 2.140 2.150 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 3.215 3.246 3.278 3.310 3.374 3.440 3.473 Period 4 4.060 4.122 4.184 4.246 4.310 4.375 4.440 4.5064.573 4.641 4.779 4.921 4.993 Period 5 5.101 5.2045.309 5.416 5.526 5.637 5.7515.8675.985 6.105 6.353 6.610 6.742 Period 6 6.152 6.308 6.468 6.633 6.802 6.975 7.153 7.336 7.523 7.716 8.115 8.536 8.754 Period 7 7.214 7.4347.662 7898 8.142 8.394 8.654 8.9239.2009.487 10.09 10.73 11.07 Period 8 8.286 8.5838.89292149.549 9.897 10.260 10.64 11.03 11.44 12.30 13.23 13.73 Period 9 9.369 9.755 10.16 10.58 11.03 11.49 11.98 12.49 13.02 13.58 14.78 16.09 16.79 Period 10 10.46 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.19 15.94 17.55 19.34 20.30 Period 11 11.57 12.17 12.81 13.49 14.21 14.97 1578 16.65 1756 18.53 2065 23.0424.35 Period 12 12.68 13.41 14.19 15.03 15.92 16.87 17.8918.98 20.14 21.3824.13 27 27 29.00 Period 13 13.81 14.68 15.62 16.63 17 71 18.88 20.14 21.50 22.95 24.52 28.03 32.09 34.35 Period 14 14.95 15.97 17.0918.29 19.60 21.02 22.55 24.21 26.02 27.98 3239 37.58 40.50 Period 15 16.10 17.29 18.60 20.02 21.58 23.28 25.13 27.15 29.36 31.77 37 28 43.84 47.58 Period 16 17.26 18.64 20.16 21.82 23.66 25.67 27.89 30.32 | 33.00 35.95 4275 50.98 55.72 Period 17 18.43 20.01 | 21.76 23.70 25.84 28.21 30.84 33.75 36.97 40.54 48.8859.12 65.08 Period 18 19.61 21.4123.41 25.65 28.13 30.91 34.00 37.4541.30 45.60 55.75 68.39 75.84 Period 19 20.81 22.84 25.12 27.67 30.54 33.76 37 38 41.45 46.02 51 16 63.44 78.97 88.21 Period 20 22.02 24 30 26.87 29.78 33.07 36.79 41.00 45.76 51.16 5728 72.05 91,02 1024 Period 21 23 24 25.7828.68 31.97 35.72 39.99 44 87 50.42 56.76 64.00 81.70 104.8 118.8 Period 22 24.47 27 30 30 54 34 25 38.51 43.39 49,01 55.46 62.87 71.40 92 50 120.4 1376 Period 23 25.72 28.8532 45 36.62 41 43 47.00 53.44 60 89 69.53 79.54 104.6 138.3 1593 Period 24 26.97 30.42 34.43 39.08 44.50 50.82 58.18 66.76 76.79 88 50 1182 158.7 1842 Period 25 28.24 32.03 36.46 41.65 47.73 54.86 63.25 73 11 84 70 1995 (Click the icon to view Futur 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, XX.) 10 Payback Plan A 11 years Plan B 11 years Calculate the ARR (accounting rate of return) for both plans (Round your answers to the nearest tenth percent, XX%) ARR Plan A 1111 96 Plan B 96 Gaclulate the NPV (net present value) of each plan Begin by calculating the NPV of Plan A (Complete all answer boxes. Enter a "0" for a apply to the plan Enter any factor amounts to three decimal places, XXXX Use parentheses or a minus sign for a negative net present .... ment 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. ce the payback for both plans. (Round your answers to one decimal place, X.X) ate th Amount invested (Round your answers to the nearest tenth perce Average amount invested Expected annual net cash inflow latett Present value of net cash inflows to the calculating the NPV of Plan A (Complete all ans places, X.XXX. Use parentheses or a minus sign A: Net Cash Annuity PV Factor PV Factor ears (Click the icon e the payback, the ARR, the NPV, and the profitability index of these two plans. both plans. (Round your answers to one decimal place, X.X.) P stom -unting rate of return) for both plans. (R Amount invested X.X%) Average amount invested Expected annual net cash inflow present value) of each plan Begin by G Present value of net cash inflows any factor amounts to three decimal pla er boxes a negat Net Cash Annuity PV Factor PV Factor Present Inflow 170/ Calculate the ARR (accounting rate of return) for both plans. (Round your answers to the nearest tenth percent, X.X%) 11 ARE Plan A Plan B 9 Gaclulate the NPV (net present value) of each plan. Begin by calculating the NPV of Plan A. (Complete all answer boxes. Enter apply to the plan. Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sian for a negative ne the payback for both plans. (Round your answers to one decimal place, ....) e the ARR (accounting rate of return) for both plans. (Round your answers to the nearest tenth per Amount invested ett the calculating the NPV of Plan A. (Complete all Slaces, X.XXX. Use parentheses or a minus si Average amount invested PV Factor Average annual operating income Annuity PV Factor (i=7%, n=10) (i=7%, n=10) 0 Present value of net cash inflows Total PV of cash inflows from any list or enter any number in the innut fint rement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans ate the payback for both plans. (Round your answers to one decimal place, XX) Il Payback A 11 11 B ulate the ARR (accounting rate of retum) for both plans. (Round your answers to the nearest tenth percent, X.X%) ARR % Amount invested clulate the NPV (net present value) of each plan Begin by ca ly to the plan Enter any factor amounts to three decimal pla boxes Enter a "O" for any zero balancesc i negative net present value.) an A Average amount invested Net Cash A Years int Inflow Average annual operating income 1-10 Present value of annuity 10 Present value of residual value TPV och inflows Present value of net cash inflows Choose from any list or enter any number in the input fields and then continue to the next question Time Remaining: 01- o BE (Click the icon to view FL 44 Net present value of Plan B Calculate the profitability index of these two plans (Round to two decimal places XXX) Profitability index Plan A 11 Plan B IE Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the term with the strengths and weaknesses listed for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method is based on cash flows can be used to assess profitability and takes into account the time value of money It has none of the weaknesses of the other models Is easy to understand is based on cash flows, and highlights risks Fir However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models qui Requirement 3. Which expansion plan should Leches Company choose? Why? fect Choose from any list of enter any number in the insidenten dQ Jility Mex of these two plans. (Round to two decimal places X.XX.) Am Average amount invested me hese capital budgeting methods eti Average annual operating income each of the four capital budgeting Bu Initial investment of Capital Budgeting Method an be used to assess profitability, Present value of net cash inflows ?y. It has none of the weaknesses is easy to understana, is based on cash flows, and highlight However, it ignores profitability and the time value of mor Can be used to assess profitability, but it ignores the time va It allows us to compare alternative investments in present val accounts for differences in the investments' initial cost. It has Aan ad the tatements (Click the icon to view Future Value of Ordinary Net present value of Plan B Calculate the profitability index of these two plans. (Round to two decimal places XXX.) Profitability index Plan A Plan B Average amount invested Requirement 2. What are the strengths and weaknesses of ti Match the term with the strengths and weaknesses listed for & Average annual operating income Capital Budgeting Method Strengths/Weaknesses Initial investment is based on cash flows, C count the time value of mone Present value of net cash inflows lels is easy to understand is based on can now, anongnghits SKS However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money. It allows us to compare atemative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models ECT 4 Requirement 3. Which expansion plan should Leches Company choose? Why? Choose from any list or enter any number in the input fields and then continue to the next question O Time Remaining: o search I C: . LENTULUI MIU MIU MIU "WIvy UI MIU MIUI wouyurly term with the strengths and weaknesses listed for each of the four capital budgeting models Budgeting Method Strengths/Weaknesses of Capital Budgeting Method is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. .... yur. MMM ULUMIWww VI wwuuyury IVU Match the term with the strengths and weaknesses listed for each of the four capital budgeting models. Capital Budgeting Method ARR E Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into accc the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money, It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models Net present value Payback method E) Profitability index Fir plan should Leches Company choose? Why? Leches Company should invest in because it has a payback period, a ARR, a Watch the term with the strengths and weaknesses listed for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into accou the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money ARR It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments' initial cost. It has none of the Net present value weaknesses of the other models. Payback method plan should Leches Company choose? Why? Profitability index because it has a payback period, a ARR, a Requirement 4. Estimate Plan A's IRR How does the inn nei hon the time value of money. It has none of the weaknesses of the other 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 assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. ARR Net present value plan should Leches Company choose? Why? Payback method because it has a payback period, a ARR, a net Profitability index IRR. How does the IRR compare with the company's required rate of return? Plan A is between money Can be used to assess profitability, but it ignores the time value of money It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. ARR plan should Leches Company choose? Why? Net present value because it has a payback period, a Payback method ARR, a net IRR. How does the IRR compare with the company's required rate of return? Profitability index Plan A is between This rate Leches Company should invest in because it has a payback penod, a ARR, a net present value and a W profitability index Requirement 4. Estimate Puan Als IRR compare with the company's required rate of return? The IRR internate of return of Plan The rate the cd e of 7 Plan B Choose from any list or enter any number in the input fields and then continue to the next question Ed on cash flows, and highlight However, it ignores profitability and the time value of mor n be used to assess profitability, but it ignores the time val allows us to compare alternative investments in present val counts for differences in the investments' initial cost. It has eaknesses of the other models. an should Leches Company choose? Why? because it has a payback period, a RR. How does the IRR CO npany's required rat Plan A is between longer mpany's hurdle rate of 7% shorter number in the input fields and then continue to the next questi (Click the icon to view Future Va (Click the icon to view Future Val wwwwwwwwwww reaknesses listed for each of the four capital budgeting models engths/Weaknesses of Capital Budgeting Method based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models easy to understand, is based on cash flows, and highlights nisks However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money it allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models n plan should Leches Company choose? Why? because it has a payback period, a ARR, a net present value, and a A'SIRR How does the IRR compare with the company's te n? b) of Plan Ais between higher the coman's hude rate of 7% lower y number in the input bolds and then continue to the next question Time Remaining C Oresent value terms and it also cost. It has none of the net present value, anc od, a ARR, a Thing any's required rate of ret higher lower e to the next question. o net present value, and a profitability index. higher lower apital Budgeting Method Strengths/Weaknesses of Ca Is based on cash flows, can be the time value of money. It Is easy to underst However, it ign Can be used to as 8%-9% It allows us to con accounts for differ 9%-10% weaknesses of the Requirement 3. Which expansion plan should Leche: 10%-12% Leches Company should invest in 12%-14% because i Requirement 4. Estimate Plan A's IRR. How does the 14%-15% The IRR (internal rate of return) of Plan A is between m This rate the company's hurdle rate of 7%. Choose from any list or enter any number in the input fields and then account weaknes Requiren shou Leches C b. Requiren does not exceed 2. How c The IRRC exceeds Q A is bet This rate the company's hure ct
