Survey of Accounting Class 24 Packet Semester Case - Cowboy Ice Cream, Inc. (CIC) As we've examined in prior class periods, CIC is currently considering expanding operations. The first expansion plan-which we've worked on in a previous class-calls for the purchase of a physical location, remodeling of that location, and purchase of a freezer. The freezer would cost $4.289, have an estimated useful life of 7 years, and have a salvage value of $300. Purchase of the freezer would allow CIC to use the new building as a retail space. In addition to that opportunity. CIC is also considering purchasing the building, but using it only as a center of operations (rather than as retail space). As a result, CIC would remodel the space, but purchase of the freezer would not be necessary. Instead. CIC would purchase a small ice cream stand. The stand would cost $7,000, have an estimated useful life of 7 years. and have no salvage value. Both options would require additional working capital of $500, which will be recovered at the end of the life of each option. Assume that CIC's cost of capital is 8%. Details about the operating cash flow for each year are below. Purchase stand Purchase freezer $9.000 $12.000 Estimated cash outflow per year Estimated cash inflow: $9.600 $9.676 $9.761 $9.857 $9.965 $10.086 $10,223 $13.390 $13.390 $13,390 $13,390 $13,390 $13,390 Year Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 $13,390 Compute the following for each option: 1. Net present value Survey of Accounting Class 24 Packet 2. Internal rate of return. For the sake of simplicity. for this computation only. (1) utilize the average net operating cash flow per year for the freezer purchase ($881.14) and (2) ignore working capital and salvage values for both options. Present value index 3. 4. Payback period Based on your analysis, which option would you recommend that CIC pursue? In the above analysis, we only considered differences between the freezer and stand. Why didn't we include information about the building or remodeling