PR $16-53($Algo$)$ Ranking Investment Proposals; NPV versus Profltabllity Index; Taxes $($Section $2)($LO $16-4,$

$16-6,16-7)$

$[$The following information applies to the questions displayed below.$]$

The owner of Waco Waffle House is considering an expansion of the business. He has Identlfied two alternatlves, as

follows:

Bulld a new restaurant near the mall.

Buy and renovate an old bullding downtown for the new restaurant.

The projected cash flows from these two alternatives are shown below. The owner of the restaurant uses a $16$ percent

after$-$tax discount rate.

$*$Includes after$-$tax cash flows from all sources, Including incremental revenue, Incremental expenses, and depreclation

tax shield.

Use Appendix A for your reference.

Note: Use approprlate factor$($s$)$ from the tables provided.

$16-53($Algo$)$ Part $1$ Compute the net present value of each alternative restaurant site.

qulred:

Compute the net present value of each alternatlve restaurant site.

Compute the profitability Index for each alternatlve.

How do the two sites rank in terms of NPV and the profitability Index?

Complete this question by entering your answers in the tabs below.

ompute the net present value of each alternative restaurant site.

ote: Round your final answers to the nearest dollar.