Required 1, 2 and 3

Problem 16-53 Ranking Investment Proposals; NPV versus Profitability Index; Taxes (Section 2) (LO 16-4, 16-6, 16-7) The owner of Waco Waffle House is considering an expansion of the business. He has identified two alternatives, as follows: Build a new restaurant near the mall. . Buy and renovate an old building downtown for the new restaurant The projected cash flows from these two alternatives are shown below. The owner of the restaurant uses a 18 percent after-tax discount rate Investment Cash Outflow: Net Artar-Tax Cash Inflows Proposal Time 0 Years 1-10 Years 11-20 Mall restaurant $353,000 $71,000 $71,000 Downtown restaurant 178,000 Includes after-tax cash flows from all sources, including incremental revenue, Incremental expenses, and depreciation tax shield. Use Anvendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the net present value of each alternative restaurant site. 2. Compute the profitability index for each alternative. 3. How do the two sites rank in terms of NPV and the profitability index? 44,500 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the net present value of each alternative restaurant site. (Round your final answers to the nearest doltar.) Net Present Value Mall restaurant Downtown restaurant Regina Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Recaired 2 Required 3 Compute the profitability index for each alternative. (Round your answers to 2 decimal places.) Profitablility Index Mall restaurant Downtown restaurant Required 1 Required 2 Required 3 How do the two sites rank in terms of NPV and the profitability index? NPV Profitablility Index Mall restaurant Downtown restaurant