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JJ Asian Cuisine has been in the business for a while. They started selling Shanghai Hand pull noodles and Lamb Cumin. The business is going well with a very healthy cash flow. After Cons retirement, Jason and James have now been forced to make the following consideration. option 1; opening an actual shop front. (Investment life 10 years) They will continue selling frozen foods to super markets, local markets and directly online but they also want to ultilise their brand name serving customers directly in their restaurant. There are many commercial premises currently for lease on Clayton Road. They have managed to find one of suitable size, and location with good car parking around. They want to set up the business from scratch utilising their brand name. They are willing to enter a ten year lease for the premises and have estimated an initial outlay of $300,000 for kitchen equipment, restaurant furniture and refitting of the premises. They currently have roughly $50,000 in their bank account, and will therefore need to borrow another $250,000 at an 8% interest only loan, paid monthly, principal payable at the end of year 10. New staff will be required under this option; additional chef and staff for waiting on tables, along with increases in promotional materials etc. See Proforma (Budgeted) Statements for estimated performance of shop front option. option 2; recreate the same existing model in a different venue (Investment life 5 years) They will need to recreate the same business model they are currently running, but in another location. Relocation costs are estimated at $50,000. The business will run the same way for the next five years at the same level as the year just passed (year 2021). Revenues and expenses assumed to remain the same over the next five years, as the year just passed. (see Income Statement 2021) Jason and James has provided you with the following financial reports. J&J Cuisine Income Statement 2021 J&J Cuisine Proforma (Budgeted) Income Statements 2022 2023-2031 $ $ Revenue Sales 388,800.00 420,000.00 388,800.00 102,500.00 Restaurant meals sales 325,000.00 745,000.00 Total 388,800.00 491,300.00 106,380.00 176,000.00 104,500.00 3,880.00 6,480.00 4,200.00 322,400.00 172,100.00 21,600.00 268,000.00 20,700.00 23,261.00 133.33 133.33 133.33 Expenses Grocery expense Petrol expense Wages expense Packaging Supplies Depreciation expense - Vacuum sealer Depreciation expense -Bowl sealing machine Depreciation expense - website Depreciation - car Depre-kitchen equipt/ rest furniture / refit Promotional / Advertising Rent expense 600.00 600.00 600.00 400.00 400.00 400.00 2,000.00 2,000.00 2,000.00 45,000.00 45,000.00 50,000.00 42,000.00 15,000.00 42,000.00 15,840.00 15,180.00 1,120.00 22,000.00 Electricity and Gas Water 26,000.00 3,200.00 3,800.00 Business registration fee Interest expense 20,000.00 Total 20,000.00 680,794.33 341,833.33 582,413.33 Profit (loss) 46,966.67 -91,113.33 64,205.67 The required rate of return is 15% Required: 1. Calculate ARR 2. Calculate the net cash flow for JJ Asian Cuisine for each proposal 3. Calculate payback,IRR, NPV, and EAA for both options 4. Comment on the outcome 5. Calculate the IRR and Payback for both proposals