You are working in a strategic management role at Best Bean, Inc., a chain of coffee shops. Your
team is considering expanding in 2020 by building one or more new retail outlets in the Detroit
area. Four locations (A, B, C, and D) are being considered. Locations A, B, and C are ten year
investments, with income projections shown in the "Location Data" tab. Location D is an eight
year investment. Locations C and D are also very near each other in Allen Park, and so should be
considered mutually exclusive (that is, Best Bean might invest in one or the other, but not both).
Your manager has asked you to prepare a report on how best to use the capital budget of $3.55 million.
This may include investing in one of the available locations, or it may not. If it is possible under the
$3,550,000 budget, you may recommend investing in more than one location.
In an Excel file:
Calculate the following for each location:
	Cash payback period
	Net present value
	Internal rate of return
	Profitability index
	Average rate of return
Use a discount rate of 16% (Best Bean's minimum rate of return) where necessary. Show all answers to
two decimal places (dollars and percentages). Note some helpful formulas in the "Excel TVM formulas"
tab.
In a Word document:
Prepare a memo summarizing your findings and recommendations.

Location A
Initial investment		1,994,000
Residual value		0
Annual depreciation		199,400
Projected income:		2020	2021	2022	2023	2024	2025	2026	2027	2028	2029
Revenues		773,700	773,700	773,700	773,700	773,700	773,700	773,700	773,700	773,700	773,700
Expenses *		577,000	577,000	577,000	577,000	577,000	577,000	577,000	577,000	577,000	577,000
Net income		196,700	196,700	196,700	196,700	196,700	196,700	196,700	196,700	196,700	196,700
Location B
Initial investment		1,594,000
Residual value		200,000
Annual depreciation		139,400
Projected income:		2020	2021	2022	2023	2024	2025	2026	2027	2028	2029
Revenues		681,000	681,000	681,000	681,000	681,000	681,000	681,000	681,000	681,000	681,000
Expenses *		517,600	517,600	517,600	517,600	517,600	517,600	517,600	517,600	517,600	517,600
Net income		163,400	163,400	163,400	163,400	163,400	163,400	163,400	163,400	163,400	163,400
Location C
Initial investment		1,408,000
Residual value		0
Annual depreciation		140,800
Projected income:		2020	2021	2022	2023	2024	2025	2026	2027	2028	2029
Revenues		571,600	571,600	561,600	561,600	551,600	551,600	541,600	541,600	531,600	531,600
Expenses *		423,600	423,600	423,600	423,600	423,600	423,600	423,600	423,600	423,600	423,600
Net income		148,000	148,000	138,000	138,000	128,000	128,000	118,000	118,000	108,000	108,000
Location D
Initial investment		2,000,000
Residual value		300,000
Annual depreciation		212,500
Projected income:		2020	2021	2022	2023	2024	2025	2026	2027
Revenues		887,300	887,300	887,300	887,300	887,300	887,300	887,300	887,300
Expenses *		662,000	662,000	662,000	662,000	662,000	662,000	662,000	662,000
Net income		225,300	225,300	225,300	225,300	225,300	225,300	225,300	225,300
* - Expense figures shown include depreciation. With the exception of depreciation, all expenses are assumed paid in cash.

Did you click on it and expand it because that is the whole excel file i have

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