Starling Enterprises is considering the purchase of a restaurant facility to open an elegant gourmet restaurant. They have found an existing facility which they consider to be the appropriate location for such an undertaking. The existing facility will cost $500,000 and will require $200,000 of redecorating and repairs in order to meet their requirements. After the restaurant is opened, their accountants project the attached estimated cash revenues and cash expenses for the first ten years of operations. At the end of the ten years, Starling intends to continue to operate the restaurant if they can continue to make a reasonable profit. However, at that time the restaurant will be completely depreciated (200% (double) declining balance depreciation). Starling is not interested in investing in the restaurant if they cannot earn an after tax rate of return of 10% per year and be repaid their initial investment on an after tax basis within 8 years. Starling has an average income tax rate of 30%. REQUIRED: (1) Using the attached form, prepare a capital budgeting worksheet to calculate the data required for this capital investment. Round all calculations to the nearest whole dollar. Using the attached form, compute the accounting rate of return, using average investment as the investment base. Round your answer to four decimal places (two decimal places for the percentage). Using the attached form, compute the payback period. Round your answer to two decimal places. Using the attached form, compute the net present value of the investment. Round your answer to the nearest whole dollar. Using the attached form, indicate what your recommendation would be to Starling Enterprises concerning their investment in the restaurant based upon their investment requirements? Explain and support your recommendation with the appropriate information. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline (1) & \multicolumn{10}{|c|}{\begin{tabular}{l} STARLING ENTERPRISES \\ CAPITAL BUDGETING ANALYSIS WORKSHEET \end{tabular}} \\ \hline & Year & \begin{tabular}{c} Cash \\ Rerenues \\ \end{tabular} & \begin{tabular}{c} Cash \\ Expenses \end{tabular} & \begin{tabular}{c} Cash \\ Income \end{tabular} & Depreciation & \begin{tabular}{l} Income \\ Before \\ Taxes \end{tabular} & \begin{tabular}{l} Income \\ Taxes \end{tabular} & \begin{tabular}{l} Income \\ After \\ Taxes \end{tabular} & \begin{tabular}{l} Cash \\ Flow \\ After \\ Taxes \end{tabular} & \begin{tabular}{c} Present \\ Valoe of \\ Cash Flow \\ After \\ Taxes \end{tabular} \\ \hline & 1 & & & & & & & & & \\ \hline & 2 & & & & & & & & & \\ \hline & 3 & & & & - & & & & & \\ \hline & 4 & & & & & & & & & + \\ \hline & 5 & & & & + & & & & & \\ \hline & 6 & & & & & & & & & \\ \hline & 7 & & & & & & & & & \\ \hline & 8 & & & & & & & & & \\ \hline & 9 & & & & & & & & & \\ \hline & 10 & & & & & & & & & \\ \hline & Total & & & & & & & & & \\ \hline & & & & & & & & & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline & \begin{tabular}{c} STARLING ENTERPRISES \\ CALCULATION OF ACCOUNTING RATE OF RETY \\ FOR CAPITAL INVESTMENT \\ \end{tabular} & \\ \hline & \begin{tabular}{l} Accounting Rate of Return = Average Annual Accounting Income / \\ Average Investment \end{tabular} & \\ \hline & Total Accounting Income From Investment & \\ \hline & Divided By Number of Years For Investment & \\ \hline & Average Annual Accounting Income From Investment & \\ \hline & & \\ \hline & \begin{tabular}{l} Cost of Investment \\ Add: Salvage Value \end{tabular} & \\ \hline & & \\ \hline & Divided By 2 & \\ \hline & Average Investment in Capital Investment & \\ \hline & Average Annual Accounting Income From Investment & \\ \hline & Divided By Average Investment in Capital Investmenr & \\ \hline & Accounting Rate of Return on Average Investment & \\ \hline & & \\ \hline \end{tabular} \begin{tabular}{|c|c|} \hline (5) & STARLING ENTERPRISES \\ \hline & \\ & \\ & \\ & \\ & \\ & \end{tabular}