The owner of Peter's Pancake House is considering an expansion of the business. He has identified two alternatives, as follows: build a new restaurant near a large suburban shopping mall buy and renovate an old building in the centre of the city for the new restaurant. The projected cash flowe from these two alternatives are shown below. The owner of the restaurant uses a 10 per cent discount rate. Cash outflow Cash inflows Investment proposal Time 0 Years 1 to 10 Years 11 to 20 Mall restaurant $400 000 550 000 $50 000 City restaurant 200 000 35 800 Required 1. Calculate the net present value of each alternative restaurant site. 2. The owner of Peter's Pancake House will consider capital projects only if they have a payback period of less than six years. He also favours projects that exhibit an accounting rate of return of at least 15 per cent, and bases a project's accounting rate of return on the initial investment in the project. () Calculate the payback period for each of the proposed restaurant sites. (b) Calculate the accounting rate of return for each proposed site. (Assume that the average annual incremental profit is $50 000 for the suburban restaurant and $35 800 for the city restaurant.) (c) If the owner of the restaurant sticks to his criteria, which site will he choose? (d) Comment on the positive and negative aspects of the techniques that the restaurant owner has used to analyse the alternatives