Locos company is considering 2 possible expansion plans. Plan A: open 8 smaller shops, cost $8,410,000, expected annual net cash inflows $1,650,000, no residual value at the end of 9 years. Plan B: open 3 larger shops, cost $8,340,000, net cash inflows $1,120,000 per year for 9 years, estimated residual value $1,300,000. Locos use straight line depreciation, requires annual return 8%.

1. compute the payback period, ARR, & NPV of the 2 plans.

2. estimate plan A's IRR. how does the IRR compare with the company's required rate of return?