P12-58A (similar to) Question Help Java Joe Inc. operates a chain of doughnut shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,840,000. Expected annual net cash inflows are $1,600,000 with zero residual value at the end of ten years. Under Plan B, Java Joe would open three larger shops at a cost of $8,440,000. This plan is expected to generate net cash inflows of $1,050,000 per year for ten years, the estimated life of the properties. Estimated residual value is $900,000. Java Joe uses straight-line depreciation and requires an annual return of 6%. E(Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) Read the requirements (Click the icon to view the future value factor table.) Requirement 1. Compute the payback period, the ARR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgeting models? Begin by computing the payback period for both plans. (Round your answers to one decimal place.) Plan A years Plan B years Present Value of Annuity of $1 Periods 12% 18% 20% 19% 29% 3% 4% 5% 6% 8% 10% 146 16% 0.990 0.926 1 0.980 0.971 0.962 0.952 0.943 0.909 0.893 0.877 0.862 0.847 0.833 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 2.941 2.246 2.174 3 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.106 3.717 3.630 2.914 4 3.902 3.808 3.546 3.465 3.312 3.170 3.037 2.798 2.690 2.589 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 5.795 4.111 3.889 6 5.601 5.417 5.242 5.076 4.917 4.623 4.355 3.685 3.498 3.326 6.472 6.002 5.786 7 6.728 6.230 5.582 5.206 4.868 4.564 4.288 4.039 3.812 3.605 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3.837 8.566 6.247 4.031 9 8.162 7.786 7.435 7.108 6.802 5.759 5.328 4.946 4.607 4.303 8.530 8.111 10 9.471 8.983 7.722 7.360 6.710 6.145 5.650 5.216 4.833 4.494 4.192 10.368 9.787 11.255 10.575 9.954 9.253 7.139 4.327 11 8.760 8.306 7.887 6.495 5.938 5.453 5.029 4.656 7.536 6.814 12 9.385 8.863 8.384 6.194 5,660 5.197 4.793 4.439 12.134 11.348 10.635 9.986 13.004 12.106 11.296 10.563 13.865 12.849 11.938 11.11810.380 9.712 13 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 9.899 7.367 5.468 5.008 14 9.295 8.244 6.628 6.002 4.611 6.811 5.575 5.092 15 8.559 7.606 6.142 4.675 18.046 16.351 14.877 13.590 12.462 11.4709.818 8.514 5.929 20 7.469 6.623 5.353 4.870 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 32.835 27.35523.115 19.793 17.159 15.046 11.925 9.779 6.097 25 7.843 6.873 5.467 4.948 4.979 30 8.055 7.003 6.177 5.517 40 5.548 8.244 7.105 6.233 4.997 Present Value of $1 Periods 29% 3% 1% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.990 0.971 0.926 0.847 1 0.980 0.962 0.952 0.943 0.909 0.893 0.877 0.862 0.833 0.980 0.826 0.797 0.718 2 0.961 0.943 0.925 0.907 0.890 0.857 0.769 0.743 0.694 3 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 4 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.747 0.681 0.437 0.402 0.951 0.906 0.863 0.822 0.784 0.621 0.567 0.519 0.476 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.665 0.583 0.452 7 0.933 0.871 0.813 0.760 0.711 0.513 0.400 0.354 0.314 0.279 0.923 0.540 0.467 8 0.853 0.789 0.731 0.677 0.627 0.404 0.351 0.305 0.266 0.233 0.263 0.914 0.837 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.225 0.194 0.820 0.744 0.558 0.386 0.162 10 0.905 0.676 0.614 0.463 0.322 0.270 0.227 0.191 LC N00 0.650 0.429 0.162 11 0.896 0.804 0.722 0.585 0.527 0.350 0.287 0.237 0.195 0.135 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.681 13 0.879 0.773 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.870 0.078 14 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.642 0.140 0.065 15 0.861 0.743 0.555 0.481 0.417 0.315 0.239 0.183 0.108 0.084 0.149 0.073 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.104 0.051 0.037 0.026 0.610 0.092 0.010 25 0.780 0.478 0.375 0.295 0.233 0.146 0.059 0.038 0.024 0.016 0.552 0.412 0.308 0.033 30 0.742 0.231 0.174 0.099 0.057 0.020 0.012 0.007 0.004 0.453 0.011 0.003 40 0.672 0.307 0.208 0.142 0.097 0.046 0.022 0.005 0.001 0.001 Future Value of Annuity of $1 Periods 14 % 1% 29% 3% 4% 5% 6% 8% 10% 12% 16% 18% 20% 1.000 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 2.020 2 2.010 2.030 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 3.091 3.122 3 3.030 3.060 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 4.506 4 4.060 4.122 4.184 4.246 4.310 4.375 4.641 4.779 4.921 5.066 5.215 5.368 7.154 7.442 5 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.877 6.152 7.716 6 6.308 6.468 6.633 6.802 6.975 7.336 8.115 8.536 8.977 9.442 9.930 7.214 7.434 7.662 7.898 8.142 8.394 8.923 9.487 10.089 10.730 11.414 12.142 12.916 11.436 12.300 13.233 8 8.286 8.583 8.892 9.214 9.549 9.897 10.637 14.240 15.327 16.499 10.159 10.583 11.027 11.491 14.776 17.519 19.086 9 9.369 9.755 12.488 13.579 16.085 20.799 10.462 10 10.950 11.464 12.006 12.578 13.181 14.487 15.937 17.549 19.337 21.321 23.521 25.959 nst un ON00 11 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 15.026 21.384 34.931 12 12.683 13.412 14.192 15.917 16.870 18.977 24.133 27.271 30.850 39.581 13 13.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 28.029 32.089 36.786 42.219 48.497 14 14.947 15.974 17.086 18.292 19.599 21.015 24.215 27.975 32.393 37.581 43.672 50.818 59.196 18.599 23.276 27.152 43.842 60.965 15 16.097 17.293 20.024 21.579 31.772 37.280 51.660 72,035 26.870 72.052 186.688 20 22.019 24.297 29.778 33.066 36.786 45.762 57.275 91.025 115.380 146.628 36.459 41.646 47,727 54.865 73.106 133.334 342.603 25 28.243 32.030 98.347 181.871 249.214 471.981 790.948 1,181.882 767.091 1,342.025 2,360.757 4,163.213 | 7,343.858 40.568 30 34.785 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 40 48.886 60.402 75.401 95.026 120.800 154.762 259.057 442.593 Future Value of $1 Periods 12% 1% 2% 3% 4% 5% 6% 8% 10% 14% 16% 18% 20% 1.080 1.120 1 1.010 1.020 1.030 1.040 1.050 1.060 1.100 1.140 1.160 1.180 1.200 1.061 2 1.020 1.040 1.082 1.103 1.124 1.166 1.210 1.254 1.300 1.346 1.392 1.440 1.093 1.191 1.482 3 1.030 1.061 1.125 1.158 1.260 1.331 1.405 1.561 1.643 1.728 1.689 1.939 4 1.041 1.082 1.126 1.170 1.216 1.262 1.360 1.464 1.574 1.811 2.074 1.159 2.488 5 1.051 1.104 1.217 1.276 1.338 1.469 1.611 1.762 1.925 2.100 2.288 1.194 1.419 6 1.062 1.126 1.265 1.340 1.587 1.772 1.974 2.195 2.436 2.700 2.986 1.149 1.504 7 1.072 1.230 1.316 1.407 1.714 1.949 2.211 2.502 2.826 3.185 3.583 1.172 1.851 2.144 1.083 1.267 1.369 1.477 1.594 2.476 2.853 3.278 3.759 4.300 1.423 3.252 4.435 5.160 9 1.094 1.195 1.305 1.551 1.689 1.999 2.358 2.773 3.803 5.234 10 1.105 1.219 1.344 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 6.192 1.898 2.853 7.430 11 1.116 1.243 1.384 1.539 1.710 2.332 3.479 4.226 5.117 6.176 12 1.127 1.268 1.426 1.601 1.796 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 1.138 6.886 13 1.294 1.469 1.665 1.886 2.133 2.720 3.452 4.363 5.492 8.599 10.699 1.980 14 1.149 1.319 1.513 1.732 2.261 2.937 3.797 4.887 6.261 7.988 10.147 12.839 3.172 15 1.161 1.346 1.558 1.801 2.079 2.397 4.177 5.474 7.138 9.266 11.974 15.407 4.661 6.727 20 1.220 1,486 1.806 2.191 2.653 3.207 9.646 13.743 19.461 27.393 38.338 25 1.282 1.641 2.094 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 1.348 10.063 30 1.811 2.427 3.243 4.322 5.743 17.449 29.960 50.950 85.850 143.371 237.376 750.378 1,469.772 2.208 7.040 45.259 93.051 188.884 40 1.489 3.262 4.801 10.286 21.725 378.721