You have just graduated from the MBA program of a large university, and one of your favorite courses was Today's Entrepreneurs. In fact, you

enjoyed it so much you have decided you want to $"$be your own boss." While you were in the master's program, your grandfather died and left

you $$1$ million to do with as you please. You are not an inventor, and you do not have a trade skill that you can market; however, you have

decided that you would like to purchase at least one established franchise in the fast$-$foods area, maybe two $($if profitable$).$ The problem is that

you have never been one to stay with any project for too long, so you figure that your time frame is $3$ years. After $3$ years you will go on to

something else.

You have narrowed your selection down to two choices: $(1)$ Franchise L$,$ Lisa's Soups, Salads & Stuff, and $(2)$ Franchise S$,$ Sam's Fabulous Fried

Chicken. The net cash flows that follow include the price you would receive for selling the franchise in Year $3$ and the forecast of how each

franchise will do over the $3-$year period. Franchise L$\text{'}$s cash flows will start off slowly but will increase rather quickly as people become more

health$-$conscious, while Franchise S$\text{'}$s cash flows will start off high but will trail off as other chicken competitors enter the marketplace and as

people become more health$-$conscious and avoid fried foods. Franchise $L$ serves breakfast and lunch, whereas Franchise $S$ serves only dinner,

so it is possible for you to invest in both franchises. You see these franchises as perfect complements to one another: You could attract both

the lunch and dinner crowds and the health$-$conscious and not$-$so$-$health$-$conscious crowds without the franchises directly competing against

one another.

Here are the net cash flows $($in thousands of dollars$)$:

Depreciation, salvage values, net working capital requirements, anc effects are all included in these cash flows.

You also have made subjective risk assessments of each franchise and concluded that both franchises have risk characteristics that require a

return of $10\%.$ You must now determine whether one or both of the franchises should be accepted.

Question$)(1)$ Draw NPV profiles for Franchises L and S$.$ At what discount rate do the profiles cross? $(2)$ Look at your NPV profile graph without

referring to the actual NPVs and IRRs. Which franchise or franchises should be accepted if they are independent? Mutually exclusive? Explain.

Are your answers correct at any cost of capital less than $23\mathrm{.}6\%?$ NOT USING EXCEL! I ONLY HAVE TI$-84$