Question Help 0 Requirements to view Present Value of $1 table) Lulus Company (Click the ico Read the required 1. Compute the payback, the ARR, the NPV and the profitability index of these two plans 2. What are the strengths and weaknesses of these capital budgeting methods? 3. Which expansion plan should Lulus Company choose? Why? 4. Estimate Plan A's IRR How does the IRR compare with the company's required rate of retum? to view Present Value of Ordinary Annuity of 51 table) to view Future Value of $1 table) to view Future Value of Ordinary Annuity of S1 table.) Requirement 1. Calculate the pay Print Done Payback Plan A years Plan B Calculate the ARR (accounting rate ofre 1 More Info Plan A Plan B Caculate the NPV (net present value) do not apply to the plan. Enter any factor The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8.410,000 Expected annual net cash inflows are $1 500 000 for 10 years with zero residual value at the end of 10 years. Under Plan B Lulus Company would open three larger shops at a cost of $8.300.000 This plan is expected to generate net cash inbows of $1.080,000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan B is $1,100,000. Lulus Company uses straight line depreciation and requires an annual return of 10% any zero balances or amounts that I present value) Plan A: Years 1 - 10 Present value of annully 10 Print Done Present value of residual val Total PV of cash inflows Initial Investment 0 Net present value of Plan A Calculate the NPV of Plan B Complete all answer boxes. Enter for any zero balances of amounts that do not apply to the plan Enter any factor amounts to three decimal places XXOOX Use parentheses or mission for a negative net present value Choose from any list or enter any number in the input fields and then continue to the next question i Reference Present Value of $1 Periods 1% 295 396 4 % 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 0.990 0.980 0.971 0.962 0.9520.943 0935 0.926 0.917 0.909 0.893 0.877 0.870 0.362 0.847 0.833 0.9800.961 0.943 0.925 0.907 0.890 0.873 0.8570.8420.8260.797 0.769 0.756 0.7430.7180.694 0.971 0.9420.915 0.8890.864 0.840 0.816 0.794 0.7720 751 0.712 0.675 0.658 0.641 0.6090.579 0.961 0.924 0.888 0.8550.8230.792 0.763 0.735 0.708 0.6830636 0.592 0.572 0.552 0.516 0.482 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 0.942 0.888 0.837 0.790 0.746 0.705 0666 0.630 0.596 0.564 0.5070.456 0.432 0.410 0.370 0.335 0.933 0.871 0.513 0.7600.711 0.665 0.623 0.5830.547 0.513 0.452 0.400 0.376 0.3540.314 0.279 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.4040.351 0.327 0.303 0.266 0233 0.914 0.837 0.766 0.703 0.6450.5920.544 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.905 0.820 0.7440.676 0.614 0.558 0.508 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.1910.162 0.896 0.8040.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.287 0.237 0.215 0.1950.162 0.135 120.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0 093 0.870 0.750 0.661 0.577 0.505 0.442 0.388 .340 0.299 0.263 0.205 0.1600.141 0.125 0.099 0.078 15 0.861 0.743 0.642 0.553 0.481 0.417 0.362 0.313 0.275 0.239 0.183 0.1400.123 0.108 0.084 0.065 16 0.853 0.728 0.623 0.534 0.458 0.394 0.3390 2920.252 0.218 0.163 0.123 0.1070.093 0.071 0.054 0944 0.714 0.605 0.513 0.436 0.371 0.317 0270 0.231 0.1980.146 0.108 0.093 0.080 0.060 0.045 0.336 0.7000.587 0.494 0.416 0.350 0.296 0.250 0.212 0.1800.130 0.095 0.081 0.069 0.051 0.038 0.828 0.686 0.570 0.475 0.3960.331 0.277 0.232 0.1940.1640.116 0.083 0.070 0.060 0.043 0.031 0.820 0.673 0.554 0.456 0.377 0.3120.258 0.215 0.178 0.149 0.1040.073 0.061 0.051 0.037 0.026 0.811 0.660 0.538 0.439 0.359 0.294 0.2420.1990.1640 .135 0.093 0.064 0.053 0.044 0.031 0.022 0.003 0.647 0.522 0.42203420278 0.226 0.1840.150 0.123 0.083 0.056 0.046 0.035 0.025 0.018 0.795 0.634 0.507 0.4060.3260.262 0.211 0.170 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.015 0.788 0.622 0.4920 3900 3100 2470.197 0.158 0.126 0.102 0.066 0.043 0.035 0.028 0.019 0.013 0.750 0.610 0.478 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.0590.038 0.030 0.024 0.0160.010 0.772 0.598 0.464 0.361 0281 0.220 0.172 0.135 0.106 0.084 0.053 0.033 0.026 0.021 0.014 0.009 0.764 0.586 0.450 0.3470 268 0.207 0.161 0.125 0.098 0.076 0.047 0.029 0.023 0.0180.0110.007 0.757 0.574 0.437 0.333 0.255 0.1960.150 0.116 0.090 0.069 0.012 0.026 0.0200.0160010 0.006 0749 0.563 0.42403210 243 0.185 0.141 0.107 0082 0.063 0.037 0.022 0.017 | 0.014 0.008 0.005 0.5520.412 0.308 0.23 0.174 0.131 0.099 0.075 0.057 0.033 0.020 0.015 0.012 0.007 0.004 0453 0.307 0.208 0.142 0.097 0.067 0.046 0.0320022 0.011 0.005 0.004 0.003 0.001 0.001 Print Done i Reference Periods S 1736 1.690 189 0.847 1.566 2.174 2.690 3.127 3.498 3.812 4.078 4.303 2096 0.833 1.528 2.106 2.599 2.991 3.326 3.605 3.837 4.031 4.192 4327 4.439 4.533 4.611 4.675 11 5.234 5.342 6.002 Present Value of Ordinary Annuity of $1 295 305 495 596 696 796 996 1096 1296 1496 1596 1696 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.9260.917 0.909 0.8930.877 0.870 0.862 1.970 1.942 1.913 1.886 1.859 1.8331.808 1.783 1.759 1.736 1.647 1.626 1.605 2.9412.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2322 2283 2.246 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.1703.037 2014 2.855 2.799 4.853 4.713 4.580 4.452 4329 4.212 4.100 3093 3.890 3.791 3.605 3.433 3.352 3274 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.4864.355 4.111 3.889 3.784 3.685 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.289 4.160 4039 7.6527325 7.020 6.733 6.463 6210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 8.566 8.1627.786 7.435 7.108 6.802 6.515 6 247 5.995 5.759 5.328 4.946 4.772 4.607 9.471 8.9838.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 10.368 9.7879 .2538.760 8.3067 .887 7.499 7.139 6.80564955.938 5.453 5.029 11.255 10.575 9.954 9.3858.863 8.384 7.943 7.536 7.161 6.814 6.194 5560 5.421 5.197 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7457 7.103 6.424 5.842 5.583 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 5.724 5.468 13.865 12.849 11.938 11.118 10,380 9.7129.108 8.5598.061 7.606 6.811 6.142 5.847 5.575 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 78246.9746.265 5.954 5.669 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 3.544 8.022 7.120 6.373 6.047 5.749 16.398 14.992 13.754 12.65911.690 10.828 10.0599 .3728.756 8.201 7.250 6,467 6.128 5.818 17.226 15.678 14.32413.134 12.08511.15810.336 9.604 8950 8.3657.366 6.550 6.199 5.877 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6.259 5.929 18.857 17.011 15.415 14.029 12.82111.764 10.836 10.017 9.2928.6497.5626.6876.312 5.973 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.4428.772 7.645 6.743 6.359 6,011 20.456 18.292 16,444 14.857 13.489 12.303 11.272 10.371 9.5808.883 7.718 6.792 6.399 6.044 21.24318.914 16.936 15.247 13.799 12.550 11.469 10.529 9.7078.985 7.784 6.835 6.434 6.073 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.543 6873 6.464 6.097 22.795 20.12117.87715.983 14.375 13.003 11.826 10.3109.929 9.1617.896 6.906 6.491 6.118 23.560 20.707 18.32716.330 14.643 13.211 11.987 10,935 10.027 9.237 7.943 6.933 6.514 6.136 24.316 21.28118.764 16.663 14.898 13.406 12.137 11.051 10.116 9 307 7.934 6.534 6.152 25.066 21.844 19.188 16.984 15.141 13.591 12 278 11.158 10.1989.3708022 6.551 6.166 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.055 6.566 6.177 32.835 27355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 5.244 7105 6.642 6.233 4.656 4.793 4.910 5.008 5.092 5.162 16 4.730 4.775 812 344 $70 4.891 5.451 5.467 5.480 5.492 4.909 4.925 4.937 4.948 4.956 4.964 4.970 4.975 4.979 5.502 7003 5.510 5.517 5.548 4.997 Print Done i Reference Future Value of Si Periods 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 2% 3% 1.020 1.030 1.040 1.061 1.061 1.093 1.082 1.126 1.104 1.159 1.126 1.194 1.149 | 1.230 1.1721.267 1.1951.305 1.219 1.344 2.410 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 1.040 1.050 1.060 1.070 1.080 1.090 1.100 1.120 1.140 1.150 1.0821.103 1.1241.145 1.166 1.1881.210 1.254 1.300 1.323 1.125 1.158 1.191 1.225 1.260 1.295 1.331 1.405 1.482 1.521 1.170 1.216 1.262 | 1.311 1.360 1.412 1.464 1.574 1.689 1.749 1.217 1.276 1.338 1.403 1.469 1.539 1.611 1.762 1.925 2.011 1.265 1.340 1.419 1.501 1.587 1.677 1.772 1.974 2.195 2.313 1.316 1.407 1.5041.606 1.714 1.828 1.949 2.211 2.502 2.660 1.369 1.477 1.594 1.718 1.851 1.993 2.144 2.476 2.853 3.059 1.423 1.551 1.689 1.838 1.999 2.172 2.358 2.773 3.252 3.518 1.480 1.629 1.7911.967 2.159 2.367 2.594 3.106 3.707 4.046 1.539 1.710 1.898 2.105 2.332 2.580 2.853 3.479 4.226 4.652 1.601 1.796 2.012 2.252 2.518 2.813 3.138 3.896 4.818 5.350 1.665 1.886 2.133 2.720 3.066 3.452 4.363 5.492 6.153 1.732 1.980 2.261 2.937 3.342 3.798 4.887 6.2617.076 1.801 2.079 2.397 2.759 3.172 3.642 4.1775 .4747.138 8.137 1.873 2.183 2.540 2.952 3.426 3.970 4.595 6.130 8.137 9.358 1.948 2.292 2.693 3.159 3.700 4.328 5.054 6.866 9.276 10.76 2.026 2.407 2.854 3.380 3.996 4.717 5.560 7.690 10.58 12.38 2.107 2.527 3.026 3.6174.316 5.142 6.116 8.613 12.06 14.23 2.191 2.653 3.207 3.870 4.6615.604 6.727 9.646 13.74 16.37 2.279 2.786 3.400 4.141 5.034 6.109 7.400 10.80 15.67 18.82 2.370 2.925 3.604 4.430 5.437 6.659 8.140 12.10 17.86 21.64 2.465 3.072 3.820 4.741 5.871 7.258 8.954 13.55 20.36 24.89 2.563 3.225 4.049 5.072 6.341 7.911 9.850 15.18 23.21 28.63 2.666 3.386 4.292 5.427 6.848 8.623 10.83 17.00 26.46 32.92 2.772 3.556 4.549 5.807 7.396 9.399 11.92 19.04 30.17 37.86 2.883 3.733 4.822 6.214 7.988 10.25 13.11 21.32 34.39 43.54 2.999 3.9205.112 6.649 8.627 11.17 14.42 23.88 39.20 50.07 3.119 4.1165.418 7.114 9.317 12.17 15.86 26.75 44.69 57.58 3.243 4.322 5.743 7.612 10.06 13.27 17.45 29.96 50.9566.21 4.801 7.040 10.29 14.9721.72 31.41 45.26 93.05 188.9 267.9 1.116 1.243 1.384 1.127 | 1.268 1.426 1.1381.2941.469 | 1.149 | 1.319 | 1.513 1.161 1.346 1.558 1.173 1.373 1.605 1.184 1.400 1.653 1.196 1.4281.702 1 208 1.457 1.754 1.220 1.486 1.806 1.232 1.516 1.860 1.245 1.546 1.916 1.257 1.577 1.974 1.270 1.608 2.033 1.282 1.641 2.094 1.295 1.673 2.157 1.707 2.221 321 1.741 2.288 1.776 2.357 1.348 1.811 2.427 1.489 2.208 3.262 plat le.) 1.308 Jor a Print Done 0 Reference Periods 14% 1.000 2.140 3.440 4.921 6.610 8.536 10.73 13.23 16.09 19.34 11.49 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.46 11.57 12.68 13.81 14.95 16.10 17.26 18.43 19.61 20.81 22.02 23.24 24.47 Future Value of Ordinary Annuity of S1 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.020 2.030 2040 2050 2.060 2.070 2.080 2.090 2.100 2.120 3.060 3.091 3.122 3.153 3.184 215 3246 3278 3.310 3.374 4.122 4.184 | 4.246 4.310 4.375 440 4.5064573 4.641 4.779 5.204 5.309 5.416 5.526 5.637 5.751 5.867 5.985 6.105 6,353 6.308 6.468 6.633 6.802 6.975 7.1537.3367.523 7.716 8.115 7.434 7.6627.898 8.142 8.394 8.654 8.923 9.200 9.487 10.09 8.583 8.8929.214 9.549 9.897 10.260 10.64 11.03 11.44 12.30 9.755 10.16 10.58 11.03 11.98 12.4913.02 13.58 14.78 10.95 11.46 12.01 12.58 13.18 13.82 14.49 15.1915.94 17.55 12.17 12.81 13.49 14.21 14.9715.78 16,65 17.56 18.53 20.65 13.41 14.19 15.03 15.9216.87 17.89 18.98 20.14 21.38 24.13 14.68 15.62 16.63 17.71 18.88 20.14 21.50 22.95 24.52 28.03 15.97 17.09 18.29 19.60 21.02 22.55 24.21 26.02 27.98 32.39 17.29 18.60 20.02 21.58 23.28 25.13 27.15 29.36 31.77 37.28 18.64 20.16 21.82 23.66 25.67 27.89 30.32 33.00 35.95 42.75 20.01 21.76 23.70 25.84 28.21 30.84 33.75 36.97 40.54 48.88 21.41 23.41 25.65 28.13 30.91 34.00 37.45 41.30 45.60 55.75 22.84 25.12 27.67 30.54 33.76 37.38 41.45 46.02 51.1663.44 24.30 26.87 29.78 33.07 36.79 41.00 45.76 51.16 57.28 72.05 25.78 28.68 31.97 35.72 39.99 44.87 50.4256.76 64.00 81.70 27.30 30.54 34.25 38.51 43.39 49.01 55.46 62.87 71.40 92.50 28.85 32.45 36.62 41.43 47.00 53.44 60.89 69.33 79.54 104.6 30.42 34.43 39.08 44.50 50.82 58.18 66.76 76.79 | 88.50 118.2 32.03 36.46 41.65 47.73 54.86 63.25 73.11 84.70 98.35 133.3 33.67 38.55 44.31 51.11 59.16 79.95 93.32 109.2 150.3 35.34 40.71 47.08 54.6763.71 74.48 87.35 102.7 121.1 169.4 37.05 42.93 49.97 58.40 68.53 80.70 95.34 113.0 134.2 190.7 38.79 45.22 52.97 62.32 73.64 87.35 104.0 124.1 148.6 214.6 40.57 47.58 56.08 66.44 79.06 94.46 1133 136.3 164.5 2413 60.40 75.40 95.03 120.8 154.8 199.6 259.1 337.9 4426767.1 15% 1.000 2.150 3.473 4.993 6.742 8.754 11.07 13.73 16.79 20.30 2435 29.00 34.35 40.50 47.58 55.72 65.08 75.84 88.21 102.4 118.8 137.6 1593 1842 212.8 245.7 283.6 327.1 377.2 434.7 1,779 23.04 27.27 32.09 37.58 43.84 50.98 59.12 68.39 78.97 91.02 104.8 120.4 138,3 158.7 181.9 208.3 238.5 272.9 312.1 356.8 1,342 Fron het 26.97 28.24 29.53 30.82 68.68 321 34.78 Print Done Is Question Help Lulus Company operates a chain of sandwich shops (Click the icon to view additional information) Read the requirements (Click the icon to view Present Value of $1 table) Click the icon to view Present Value of Ordinary Annuity of S1 table) (Click the icon to view Future Value of $1 table) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Requirement 1. Compute the payback, the ARR the NPV, and the profitability index of these two plans Calculate the payback for both plans. (Round your answers to one decimal place XX) Payback Plan A Plan B Calculate the ARR (accounting rate of return) for both plans (Round your answers to the nearest tenth percent. XX%) ARR Plan A Plan B Caciulate the NPV (net present value) of each plan Begin by calculating the NPV of Plan A (Complete all answer boxes Enter a "0" for any zero balances or amounts that do not apply to the plan Enter any factor amounts to three decimal places, XXX Use parentheses or a minussion for a negative not present value) Plan A: Net Cash Annuity PV Factor PV Factor Present Years Inflow (-10%, n-10) (-10%, 1-10) Value 1-10 Present value of annuity Present value of residual value Total PV of cash inflows 0 Initial Investment Net present value of Plan A Calculate the NPV of Plan B (Complete all answer boxes. Entora " for any zero balances or amounts that do not apply to the plan Enter any factor amounts to three decimal places, XXXX Use parentheses or a minus sign for a negative not present ) Choose from any list or enter any number in the input fields and then continue to the next question Question Help Lulus Company operates a chain of sandwich shops Click the icon to view additional information) Read the requirements (Click the icon to view Present Value of $1 table) (Click the icon to view Present Value of Ordinary Annuity of $1 table) Click the icon to view Future Value of $1 table) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Calculate the NPV of Plan B. (Complete all answer boxes. Enter for any zero balances or amounts that do not apply to the plan. Enter any factor amounts to three decimal places, X XOOX Use parentheses or a minus sign for a negative not present value) Plan B Years Net Cash Inflow Annuity PV Factor (-10%, n-10) PV Factor (-10%, 1-10) Present Value 1 - 10 10 Present value of annuity Present value of residual value Total PV of cash inflows Initial Investment Net present value of Plan B O Calculate the profitability index of these two plans (Round to two decimal places XXX) - Profitability index Plan A Plan B Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the form with the strengths and weaknesses listed for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models is easy to understand, is based on cash flows, and highlights risks. However, it ignores profitability and the time value of money Choose from any list or enter any number in the input fields and then continue to the next question Question Help (Click the icon to view Present Value of $1 table) Lulus Company operates a chain of sandwich shops i (Click the icon to view additional information) Read the requirements (Click the icon to view Present Value of Ordinary Annuity of $1 table) (Click the icon to view Future Value of $1 table) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Profitability Index Plan A Plan B Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the term with the strengths and weaknesses listed for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models Is easy to understand is based on cash flows, and highlights risks However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignore the time value of money it allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models not present value and profitability Index Requirement 3. Which expansion plan should Lulus Company choose? Why? Luis Company should invest in because it has a payback period, al MARR Requirement 4. Estimate Plan A's RR. How does the IRR compare with the company's required rate of return? The IRR (internal rate of return) of Plan Ais between This rate the company's hurde rate of 10% Choose from any list or enter any number in the input fields and then continue to the next question - (Click the icon to view Future Value of Ordin- Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans, Calculate the payback for both plans. (Round your answers to one decimal place, XX.) Payback years years Plan A Plan B Amount invested Average amount invested Calculate th Expected ar Expected annual net cash inflow Present value of net cash inflows Plan A ns. (Round your answers to the nearest tenth percent. XX%.) ARR Plan B Caciulate the NPV (net present value) of each plan. Begin by calculating the NPV of Plan A (Complete all answer boxes. Enter a "0" for any zer do not apply to the plan. Enter any factor amounts to three decimal places, X XOX. Use parentheses or a minus sign for a negative net present Plan A: Years 1 - 10 Net Cash Inflow Annuity PV Factor (-10%, n=10) PV Factor (-10%, n=10) Present Value 10 Present value of annuity Present value of residual value Total PV of cash inflows O Initial Investment Net present value of Plan A Calculate the NPV (Click the icon to view Future Value of $1 table) (Click the icon to view Future Value of Ordinary Annuity of Total PV of cash intlows 0 Initial Investment Net present value of Plan B Calculate the profitability index of these two plans (Round to two decimal places XXX) = Profitability index Plan A Plan B Average amount invested Average annual operating income Requireme Initial investment Match the Present value of net cash inflows s of these capital budgeting methods? I for each of the four capital budgeting models Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models. Is easy to understand, is based on cash flows, and highlights risks. However, it ignores profitability and the time value of money. Can be used to assess profitability, but it ignores the time value of money. It allows us to compare alternate Investments in promont value formand ILUR UI 1 - 10 Present value of annuity 10 Present value of residual value Total PV of cash inflows UULUI 0 Initial Investment Net present value of Plan B Calculate the profitability index of these two plans. (Round to two decimal places X.XX.) Plan A Plan B Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the term with the strengths and weaknesses listed for each of the four capital budgeting models. Capital Budgeting Method ARR Net present value Payback method Profitability index Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into act the time value of money. It has none of the weaknesses of the other mode Is easy to understand, is based on cash flows, and highlights risks. However, it ignores profitability and the time value of money Can be used to assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it als accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. Choose from any list or enter any number in the input fields and then continue to the next