Q1. Your grandfather would like to share some of his fortunes with you. He offers to give you money under one of the following scenarios (you get to choose 1.88,550 per year at the end of each of the next seven years 2.548,350 (lump sum) now 3. $100.250 (lump sum) seven years from now Requirements 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to nearest whole dollar. 2. Would your preference change if you used a 12% discount rate? Q2. Mohammed operates a chain of sandwich shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,600,000. Expected annual net cash inflows are $1,600,000, with zero residual value at the end of 10 years. Plan B, Mohammed would open three larger shops at a cost of $8,300,000. This plan is expected to generate net cash inflows of S1,090.000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan B is $1,300,000. Mohammed uses straight-line depreciation and requires an annual return of 9%. Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. 2. Which expansion plan should Mohammed choose? Why? Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return