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Requirement 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8.410,000. Expected annual

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Requirement 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8.410,000. Expected annual net cash inflows are $1,550,000, with zero residual value at the end of 10 years. Under Plan B. Division would begin producing a new product at a cost of $8,100,000. This plan is expected to generate net cash inflows of $1,020,000 per year for 10 years, the estimated useful ife of the product line. Estimated residual value for Plan B is $1,100,000. Division D uses straight-line depreciation and requires an annual return of 10% 4a. Compute the payback, the ARR, the NPV, and the profitability Index for both plans. Begin by calculating the payback for both plans. (Round your answers to one decimal place, XX.) 5.4 years 79 years Amount invested Expected anni nel cash intow Payback Plan A 5 8.410.000 1,550.000 Plan B 3.100.000 1,020,000 Calculate the ARR (Ccounting rate of return) for both plans. (Round your answers to the nearestonth percent. XX%) Average annual operating income Average amount invested ARR Pan A $ 709,000 4,205,000 169 % Plan B 320.000 4,600.000 70 Caciulate the NPV (net present value of each plan. Begin by calculating the NPV of Plan A (Complete all answer boxes. Enter a "O for any zero balances or amounts that do not apply to the plan. Enter any factor amounts to three decimal places, X.XXX Use parentheses or a minus sign for a negative not present value) 4. Use Excel to verify the NPV clow ns in Requirement dia) and the actual IRR for the two plans. How does the IRR of each an compare with the company's required rate of rotun? Begin by using Extra calculate the NPV of both plans. Round the NPV cations to the nearest while dotar Use pres s or for a negative represent ) The NPV represent of Pan As L The NPV inet present value) of Plan Bins Eternumber in the stadswd then click Check Answer 4 punane Clear All Check Answer esc

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