The company is considering two possible expinsion plans. Plan A would open eight smaller shops at a cost of 58,600,000. Expected annual net cash inllows are $1.525.000 for 10 years, with zero residual value at the end of 10 years. Under Plan B, eynons Company would open three larger shops at a cost of 58,300,000. This plant's expected to generate net cash intlows of 51,050,000 per year for 10 . years, the ostimated useful life of the properties. Estimated residual value for Plan B is $960,000. Lemons Company uses straight-ine depteciation and requires an annual return of 7%. 1. Compute the payback, the ARR, the NPV, and the profitablity index of these two plans. 2. What are the strengths and weaknesses of these capital budgeting methods? 3. Which expansion plan should Lemons Company choose? Why? 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return