QUESTION 4: Double Deuce Bars Inc. are set to expand and have $800,000 to invest in either a bar or a cafe diner in Boston, Massachusetts and have asked you to provide information that will help them choose which is the more favourable of these two potential projects. Details of the annual net cash flows are as follows and these are assumed to arise evenly throughout the year: Bar Cafe Year $ $ 500,000 300,000 400,000 400,000 t w Ny 400,000 470,000 280,000 560,000 REQUIRED: (a) Calculate the simple payback period for each project, showing your workings. (2 marks) (b) Calculate the discounted payback period for each project and the net present value for each project using an interest rate of 20% (see table below). Include a brief interpretation of your results and make a recommend to Double Deuce Bars Inc of which project is the more favourable investment (23 marks) Future 15% 16% 17% 18% 19% 20% years 1 0.870 0.862 0.855 0.847 0.840 0.833 2 0.756 0.743 0.731 0.718 0.706 0.694 0.658 D.641 0.624 0.609 0.593 0.579 4 0.572 0.552 0.534 0.516 0.499 0.482 0.497 0.476 0.456 0.437 0.419 0.402 6 0.432 0.410 0.390 0.370 0.352 0.335 0.376 0.354 0.333 0.314 0.296 0.279 (Present value table for fl at compound interest)