Ronnie Arthur is a serial entrepreneur from Saginaw, MI, who is trying to decide whether to spend his time and investment capital on his barbershop or on his clothing line. He has decided to engage in some capital budgeting analysis in order to help him make this decision. Ronnie has determined the following predicted costs and benefits of devoting his resources to each business: Barbershop Clothing Line Initial Investment $ 100.000 32,000 50.000 $ 20.000 Working Capital Required Yearly Depreciation Enterprise Value at End of 8 years Annual Net Cash Inflows 12,500 $ 4.000 $ 100.000 $ 75.000 $ 25.000 $ 16.000 Required Rate of Return 11096 1596 What is the payback period for each chain? (1 point) What is the Net Present Value of each chain? (9 points) What is the Project Profitability Index of each chain? (1 point) What is each chain's simple rate of return? (1 points) Upload your completed Excel file with the answers to the Capital Budgeting Questions. Barbershop Clothing Line Initial Investment $ 100,000 $ 32,000 Working Capital Required $ 50,000 $ 20,000 Yearly Depreciation $ 12,500 $ 4,000 Enterprise Value at End of 8 years $ 100,000 $ 75.000 Annual Net Cash Inflows $ 25,000 $ 16,000 Required Rate of Return 10% 15% Barbershop $1 $ 1 $ 1 $ 1 $ 1 S 1 $ 1 S 1 $ 1 $ 1 Chain A Payback Period {Discount Factor Here) {Discount Factor Here) PV of Cash Inflows PV of Cash Outflows Net Present Value Project Profitability Index Simple Rate of Return 14 5 6 7 8 $1 $1 $1 1.0% 1.0% 0 $1 $1 1 2 13 $ 1 $ 1 S 1 $ 1 Clothing Line $1 Chain B Payback Period {Discount Factor Here) (Discount Factor Here) PV of Cash Inflows PV of Cash Outflows Net Present Value Project Profitability Index Simple Rate of Return $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $1 $1 $1 1.0% 3 4 7 18 0 $1 $1 1 12 $ 1 $ 1 $ 1 $ 1 F G - H K M N P R S U v w 0.917 0.909 0.842 0.826 0.772 0.751 0.708 0.683 0.650 0.621 0.857 0.794 0.735 0.681 0.901 0.812 0.731 0.659 0.593 0.893 0.885 0.877 0.797 0.783 0.769 0.712 0,693 0.675 0.636 0.613 0.592 0.567 0.543 0.519 0.870 0.756 0.658 0.572 0.497 OBIO 0.763 0.213 17 0.855 0.731 0.624 0.534 0456 0.862 0.743 0.641 0.552 0.476 0.840 0.706 0.593 0847 0.718 0.609 0516 0.437 0.833 0.826 0.694 0.683 0.575 0.564 0.482 0.467 0.402 0.386 0820 0.672 0.551 0.451 0.370 0.813 0.661 0.537 0.437 0.355 0.806 0.650 0.524 0.423 0.341 0.800 0.640 0.512 0.410 0.328 4 5 6 0.85 0.822 0.499 0.419 5 075 0.747 7 8 9 10 0.790 0.746 0.760 0.711 0.731 0.677 0.703 0.645 0.676 0.614 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0456 0.432 0.400 0.376 0.351 0.327 0.30R 0.284 0.270 0.247 0.410 0.354 0.305 0.263 0.227 0.390 0,333 0.285 0 243 0.208 0.370 0.314 0.266 0.225 0.191 0.352 0.335 0.319 0.303 0289 0.296 0.279 0.263 0.249 0.235 0.249 0.233 0.218 0.204 0.191 0.209 0.194 0.180 0.167 0.155 0.176 0.162 0.149 0.137 0.126 0.275 0.262 0.222 0.210 0.179 0.168 0.144 0.134 0.116 0.107 8 9 10 11 12 13 4 5 6 7 0.195 0.168 11 12 13 14 15 0.650 0.625 0.601 0.577 0.555 0.585 0.527 0.475 0.557 0.497 0.444 0.530 0.469 0.415 0.505 0.442 0.388 0.481 0.417 0.362 0.429 0.388 0.397 0.356 0.368 0.326 0.340 0.299 0.315 0.275 0.350 0.317 0.319 0.286 0.290 0.258 0.263 0.232 0.239 0.209 0.287 0.257 0.229 0.205 0.183 0.261 0.231 0.204 0.181 0.160 0.237 0.208 0.182 0 160 0.140 0.215 0.187 0.163 0,141 0.123 0.145 0.125 0.108 0.178 0.152 0.130 0.111 0.095 0.162 0.137 0.116 0.099 0.084 0.148 0.135 0123 0.112 0.103 0.094 0.086 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0.104 0.093 0.084 0.075 0.068 0.061 0.055 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.074 0.065 0.057 0.051 0.045 0.040 0.035 8 9 0.107 1 16 17 18 19 20 0.534 0.513 0.494 0.475 0.456 0.458 0.436 0.416 0.396 0.377 0.394 0.371 0.350 0.331 0.312 0.339 0.317 0.296 0.277 0.258 0.292 0.252 0.218 0.270 0.231 0.198 0.250 0.212 0.180 0.232 0.194 0.164 0.215 0.178 0.149 0.188 0.170 0.153 0.138 0.124 0.163 0.146 0.130 0.116 0.104 0.141 0.125 0.111 0.098 0.087 0.123 0.108 0.095 0.083 0.073 0.093 0.081 0.070 0.061 0.093 0.080 0069 0.060 0.051 0.081 0.069 0.059 0.051 0.043 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 0.037 0.031 0.025 0.022 0.019 0.016 0.014 0.012 21 22 23 24 25 0.439 0.422 0.406 0.390 0.375 0.359 0.342 0.326 0.310 0.295 0.294 0.2420 199 0.278 0.226 0.184 0.262 0.211 0.170 0.247 0.197 0.158 0.233 0.184 0.146 0.164 0.150 0.138 0.126 0.116 0.135 0.123 0.112 0.102 0.092 0.112 0.101 0.091 0.082 0.074 0.093 0.083 0.074 0.066 0.059 0.077 0.068 0,060 0.053 0.047 0.064 0.056 0.049 0.043 0.038 0.053 0.046 0.040 0.035 0.030 0.044 0.038 0.033 0.028 0.024 0.037 0.031 0.026 0.022 0.018 015 0.013 0.011 0.009 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0.027 0.022 0.018 0.015 0,012 0.010 0.009 0.007 0.006 0.023 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.020 0.016 0.013 0.010 0.0090.007 0.006 0.005 0.004 26 0.361 0.347 0.333 0.281 0.268 0.255 0.220 0.207 0.196 0.172 0.161 0.150 27 28 0.135 0.125 0.116 0.106 0.098 0.090 0.084 0.076 0.069 0.066 0.060 0.054 0.053 0.042 0033 0.047 0.037 0.029 0.042 0.033 0.026 0.026 0.023 0.020 0.021 0.018 0.016 0.012 0.014 0.012 0.014 0.011 0.009 0.011 0.009 0.007 0.010 0.008 0.006 0.007 0.006 0.005 0.004 0.006 0.005 0.004 0.003 0.005 0.004 0.003 0.002 0.003 0.002 0.002 Question 9 One-Time Discount Factors Annuity Discount Factors + culation Mode: Automatic Workboox Statistics 140 U V X w K B Periods 1 2 3 530 0.952 1 859 2.723 3.546 4.329 D 6% 0.943 1.833 2.678 3,465 4.212 E 7% 0.935 1.808 2.624 3.387 4.100 0.962 1.886 2.775 3.630 4.452 G H 94 10% 0.917 0.909 1.759 1.736 2.531 2.487 3.240 3.170 3.890 3.791 B% 0.926 1.783 2.577 3.312 3.993 L M N 0 14% 15% 16% 17% 0.877 0.870 0.862 0.855 1.647 1.626 1 605 1.585 2.322 2 283 2.246 2.210 2.914 2.855 2.798 2.743 3.433 3.352 3.274 3.199 11% 1296 13 0.901 0.893 0.885 1 713 1.690 1.668 2.444 2.402 2 361 3.102 3.037 2.974 3.696 3.605 3.517 2 0 R S 19% 20% 219 0.840 0.833 0.826 1.547 1.528 1 509 2.140 2.106 2.074 2.639 2.589 2.540 3.058 2.991 2.926 18% 0.847 1 566 2.174 2.690 3.127 24% 0.806 1.457 1.981 T 22% 0.820 1.492 2.042 2.494 2.864 23% 0.813 1474 2.011 2448 2.803 25% 0.800 1.440 1.952 2 362 2.689 4 3 2.404 2.745 5 4 5 3.998 6 7 5.242 6.002 6.733 7.435 8.111 5.076 5.786 6.463 7.10B 7.722 4.917 5.582 6.210 6.802 7.360 4.767 5.389 5.971 6.515 7.024 4.623 5.206 5.747 6.247 6.710 4.486 4.355 5.033 4.868 5.535 5.335 5.995 5.759 6.418 6.145 4.231 4.712 5.145 5.537 4.111 4564 4.968 5.328 5650 3 889 4.288 4.639 4.946 5 216 4.423 4799 5.132 5.426 3.784 3.685 3.589 3.498 4 160 4039 3.922 3.812 4.487 4.344 4.207 4.078 4.772 4 607 4.451 4 303 5.019 4.833 4.659 4.494 8 3.410 3.706 3.954 4.163 4.359 3.326 3.245 3.167 3.605 3.508 3.416 3.837 3.726 3.619 4.031 3.905 3.786 4.192 4054 3.923 3.092 3.020 3.327 3.242 3.518 3.421 3.673 3.566 3.799 3.682 2.951 3.161 3.329 3.463 3.571 9 5.889 10 6.805 9 10 11 12 13 14 15 16 17 18 19 20 11 12 13 14 15 8.760 9.385 9.986 10.563 11.118 8.306 8.863 9.394 9.899 10.380 7.887 8.384 8.853 9.295 7.499 7.943 8.358 8.745 9 108 7139 7.536 7.904 8.244 8.559 7.161 7.487 7.786 8.061 6.495 6.814 7.103 7.367 7.606 6.207 6.492 6.750 6.982 7.191 5.938 5.687 6.194 5.918 6.424 6.122 6.628 6 302 5.811 6.462 5.45 5.650 S 842 6 002 6.142 5.234 5421 5.583 5.724 5.847 5.029 5.197 5.342 5.468 5.575 4.836 4.656 4.988 4.793 5.118 4.910 5.229 5.000 5.324 5.092 4.485 ..611 4.715 4.802 4.327 4 439 4.533 4.611 4.675 4.177 4.035 4.278 4.127 4.362 4.203 4.432 4.265 4.489 4.315 3.902 3.776 3.656 3.985 3.851 3.725 4.053 3.912 3780 4.108 3.962 3.824 4 153 4.001 3.859 4.876 9.712 16 17 11.652 10.838 10.106 12 166 11 274 10.477 12.659 11.690 10.82B 13.134 12.085 11.158 13.590 12.462 11 470 9.447 9.763 10.059 10 336 10.594 8.313 7824 8544 8.022 8.756 8.201 8.950 8.365 9.129 8.514 B.851 9.122 9.372 9.604 9.818 7.379 6.974 7.549 7.120 7.702 7.250 7.839 7.366 7.963 7459 6604 6265 5.954 5.668 5.405 5.162 4.938 6.729 6.373 6.047 5.749 5.475 5.222 4.990 6,840 6.462 6.128 5.818 5.534 5.273 5.033 6938 6.550 6 19B 5.877 5.584 5.316 5.070 7 025 6.623 6.259 5.929 5.628 5.353 5.101 4.730 4 775 4812 4.843 4.870 4 536 4.576 4.608 4.635 4.657 18 4.357 4.391 4.419 4.442 4.460 4.189 4 033 3.887 4 219 4.059 3.910 4 243 4.080 3.928 4.263 4,097 3.942 4.279 4.110 3.954 19 20 21 22 14.029 14.451 14.857 15.247 15.622 12 821 13.163 13.489 13.799 14 094 9.292 8.649 8.075 7.562 9.442 8.7728.176 7 645 9.580 8.883 8.266 7718 9.707 8.985 8.348 7.784 9.8239.077 8.422 7.843 11.764 10.836 10.017 12.042 11.061 10 201 12.303 11.272 10.371 12.550 11.469 10.529 12.783 11.654 10 675 7.102 6.587 6.312 5.973 5.665 7.170 6.743 6 359 6.011 5.696 7.230 6.792 6.399 6.044 5.723 7.283 6.835 6.434 6.073 5.745 7.330 6.873 6.464 6.097 5.766 5.384 5.127 5.410 5.149 5.432 5.167 5.451 5.182 5.467 5.195 4.891 4.909 4.925 4.937 4.675 4.690 4.703 4.713 4.721 4.476 4.488 4.499 4.507 4.514 23 4.292 4302 4.311 4.318 4.323 4 121 3.963 4.130 3.970 4137 3.976 4.143 3.981 4.147 3.985 4.948 30 25 32 33 26 27 28 15.983 14.375 16.330 14 643 16.663 14.898 13.003 11.B26 13.211 11.987 13.406 12.137 10 810 10.935 11.051 9.929 9.161 B.488 10.027 9.237 8,548 10.1169.307 8.602 7896 7372 7.943 7.409 7.984 7.441 6.906 6.935 6.961 6.491 6.118 6.514 6.136 6.534 6.152 5.783 5480 5.798 5.492 5.810 5.502 5.205 4.956 5.215 4.964 5.2234970 4.728 4.520 4.328 4.734 4.524 4.332 4.739 4.528 4.335 4.151 4.154 4.157 3.988 3,990 3.992 24 Question One-Time Discount Factors Annuity Discount factors