Part C ONLY

Marcus & Tyler sells frozen custard and sandwiches. It is considering a new site that will require a $2 million investment for land acquisition and construction costs. The following operating results are expected: Disregard income taxes. Sales Revenue $980,000 Less operating expenses: Food & Supplies $320,000 Wages & Salaries 180,000 Insurance & Taxes 40,000 Utilities 10,000 Depreciation 70,000 620,000 Operating income $360.000 Required: A. If management requires a payback period of four years or less, should the new site be opened? Why? B. Compute the accounting rate of return on the initial investment. C. What significant limitation of payback and the accounting rate of return is overcome by the net- present-value method