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More Info Lados Company operates a chain of sandwich shops Click the icon to view additional information) (Cd Read the requirements (Cid (Cic id The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8.400,000. Expected annual net cash inflows are $1,500,000 for 10 years, with zero residual value at the end of 10 years. Under Plan B, Lados Company would open three larger shops at a cost of $8.240,000 This plan is expected to generate net cash inflows of $1.020,000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan B is $1,000,000. Lados Company uses straight-line depreciation and requires an annual return of 6% Requirement 1. Compute the payback, the ARR the NPV, and the profitability index of these two plans. Calculate the payback for both plans. (Round your answers to one decimal place, XX) Print Done Plan A Plan B Calculate the ARR (ccounting rate of return) for both plans. (Round your answers to the nearest tenth percent, X.XX.) ARR Plan A Plan B Choose from any list or enter any number in the input fields and then continue to the next question. (Click the icon to view Fu Requirement 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. Calculate the payback for both plans. (Round your answers to one decimal place, X.X.) Payback years Plan A Plan B years Calculate the ARR (accounting rate of return) for both plans. (Round your answers to the nearest tenth percent, X.X%.) = ARR Plan A Plan B Caclulate the NPV (net present value) of each plan. Begin by calculating the NPV of Plan A. (Complete all answer boxes. Enter a "0" for any Choose from any list or enter any number in the input fields and then continue to the next question. Question Help (Click the icon to view Present Value of $1 table) Lados Company operates a chain of sandwich shops Click the icon to view additional information) (Click the icon to view Present Value of Ordinary Annuity of $1 table) Read the requirements (Click the icon to view Future Value of $1 table) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) Cacate the NPV (net present value of each plan. Begin by calculating the NPV of Plan A (Complete all answer boxes. Enter a "O" for any zero balances or amounts that do not apply to the plan. Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative not present value) Plan A Net Cash Inflow Annuity PV Factor #6%, n=10) PV Factor =%, n10) Present Value Years 1 - 10 10 Present value of annuity Present value of residual value Total PV of cash inflows 0 Initial Investment Net present value of Plan A Calculate the NPV of Panamnet w how F ar frenar balances that althanian Fanartants in the decimal lang Choose from any list or enter any number in the input fields and then continue to the next question Click the icon to view additional information.) (Click the icon to view Present Read the requirements. (Click the icon to view Future Va (Click the icon to view Future Va opron vurur Calculate the profitability index of these two plans. (Round to two decimal places X.XX.) Profitability index Plan A Plan B Requirement 2. What are the strengths and weaknesses of these capital budgeting methods? Match the term with the strengths and weaknesses listed for each of the four capital budgeting models. Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models. Choose from any list or enter any number in the input fields and then continue to the next question. (Click the icon (Click the icon Capital Budgeting Method Strengths/Weaknesses of Capital Budgeting Method Is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other models. Is easy to understand, is based on cash flows, and highlights risks. However, it ignores profitability and the time value of money. Can be used to assess profitability, but it ignores the time value of money. It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments' initial cost. It has none of the weaknesses of the other models. Requirement 3. Which expansion plan should Lados Company choose? Why? Choose from any list or enter any number in the input fields and then continue to the next question. Lados Company operates a chain of sandwich shops. Click the icon to view additional information.) (Click the icon to view Present Value of $1 table.) Read the requirements (Click the icon to view Present Value of Ordinary Annuity of (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of It allows us to compare alternative investments in present value terms and it also accounts for differences in the investments initial cost. It has none of the weaknesses of the other models. Requirement 3. Which expansion plan should Lados Company choose? Why? Lados Company should invest in because it has a payback period, a VARR, a Requirement 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? net present value, and a profitability index. The IRR (internal rate of return) of Plan A is between This rate the company's hurdle rate of 6%. Choose from any list or enter any number in the input fields and then continue to the next question, Reference eriods 2 3 4 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 V.820 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 4% 5% 0.962 0.952 0.925 0.907 0.889 0.864 0.855 0.823 0.822 0.784 0.790 0.746 0.760 0.711 0.731 0.677 0.703 0.645 0.676 0.614 0.650 0.585 0.625 0.557 0.601 0.530 0.577 0.505 0.555 0.481 0.534 0.458 0.513 0.436 0.494 0.416 0.475 0.396 0.456 10.377 6% 7% 8% 0.943 0.935 0.926 0.890 0.873 0.857 0.840 0.816 0.794 0.792 0.763 0.735 0.747 0.713 0.681 0.705 0.666 0.630 0.665 0.623 0.583 0.627 0.582 0.540 0.5920.544 0.500 0.558 0.508 0.463 0.527 0.475 0.429 0.497 0.444 0.397 0.469 0.415 0.368 0.442 0.388 0.340 0.417 0.362 0.315 0.394 0.339 0.292 0.371 0.317 0.270 0.350 0.296 0.250 0.331 0.277 0.232 0.312 0.258 1 0.215 9% 10% 0.917 0.909 0.842 0.826 0.772 0.751 0.7080.683 0.650 0.621 0.596 0.564 0.547 0.513 0.502 0.467 0.460 0.424 0.422 0.386 0.388 0.350 0.356 0.319 0.326 0.290 0.299 0.263 0.275 0.239 9.252 0.218 0.231 0.198 0.212 0.180 0.194 0.164 0.178 0.149 12% 14% 0.893 0.877 0.797 0.769 0.712 0.675 0.636 0.592 0.567 0.519 0.507 0.456 0.452 0.400 0.404 0.351 0.361 0.308 0.322 0.270 0.287 0.237 0.257 0.208 0.229 0.182 0.205 0.160 0.183 0.140 0.163 0.123 0.146 0.108 0.130 0.095 0.116 0.083 0.1041 0.073 15% 16% 18% 20% 0.870 0.862 0.847 0.833 0.756 0.743 0.7180.594 0.658 0.641 0.6090.579 0.572 0.552 0.516 0.482 0.497 0.476 0.437 0.402 0.432 0.410 0.370 0.335 0.376 0.354 0.314 0.279 0.327 0.305 0.266 0.233 0.284 0.263 0.225 0.194 0.247 0.191 0.162 0.215 0.195 0.162 0.135 0.187 0.168 0.137 0.112 0.163 0.145 0.116 0.093 0.141 0.125 0.099 0.078 0.123 0.108 0.084 0.065 0.107 0.093 0.071 0.054 0.093 0.080 0.060 0.045 0.081 0.069 0.051 0.038 0.070 0.060 0.043 0.031 0.061 10.051 10.037 10.026 0.227 20 Print Done DN Reference 14 V.JVO 0.340 0.315 0.270 0.250 0.232 0.215 0.184 0.013 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.811 0.803 0.795 0.788 0.780 0.772 0.764 0.757 0.749 0.742 0.672 0.608 V. 0.758 0.743 0.728 0.714 0.700 0.686 0.673 0.660 0.647 0.634 0.622 0.610 0.598 0.586 0.574 0.563 0.552 0.453 0.372 V.001 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.538 0.522 0.507 0.492 0.478 0.464 0.450 0.437 0.424 0.412 0.307 0.228 0.001 0.000 0.577 0.505 0.555 0.481 0.534 0.458 0.513 0.436 0.494 0.416 0.475 0.396 0.456 0.377 0.439 0.359 0.422 0.342 0.406 0.326 0.390 0.310 0.375 0.295 0.361 0.281 0.347 0.268 0.333 0.255 0.321 0.243 0.308 0.231 0.208 0.142 | 0.141 | 0.087 0.409 9.413 0.442 0.388 0.417 0.362 0.394 0.339 0.371 0.317 0.350 0.296 0.331 0.277 0.3120.258 0.294 0.242 0.278 0.226 0.262 0.211 0.247 0.197 0.233 0.184 0.220 0.172 0.207 0.161 0.196 0.150 0.185 0.141 0.174 0.131 0.097 0.067 0.054 0.034 V.J20 0.299 0.275 0.252 0.231 0.212 0.194 0.178 0.164 0.150 0.138 0.126 0.116 0.106 0.098 0.090 .082 0.075 0.032 0.013 U.ZJU 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.135 0.123 0.112 0.102 0.092 0.084 0.076 0.069 0.063 0.057 0.022 0.009 V.Z 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.093 0.083 0.074 0.066 0.059 0.053 0.047 0.042 0.037 0.033 0.011 0.003 0.170 .TOZU.100 0.160 0.141 0.140 0.123 0.123 0.107 0.108 0.093 0.095 0.081 0.083 0.070 0.073 0.061 0.064 0.053 0.056 0.046 0.049 0.040 0.043 0.035 0.038 0.030 0.033 0.026 0.029 0.023 0.026 0.020 0.022 0.017 0.020 0.015 0.005 0.004 0.001 1.140 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.044 0.038 0.033 0.028 0.024 0.021 0.018 0.016 0.014 0.012 0.003 VITU 0.099 0.084 0.071 0.060 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.011 0.010 0.008 0.007 0.001 VUN 0.078 0.065 0.054 0.045 0.038 0.031 0.026 0.022 0.018 0.015 0.013 0.010 0.009 0.007 0.006 0.005 0.004 0.001 0.146 0.135 0.125 0.116 0.107 0.099 0.046 0.021 0.001 0.001 Print Done TO Reference Periods 1% 1.010 1.020 1.030 1.041 12% 1.120 1.254 1.405 1.574 1.051 1.501 1.149 1.072 1.083 1.094 1.105 2% 3% 4% 1.030 1.040 1.040 1.061 1.082 1.061 1.093 1.125 1.126 1.170 1.159 1.217 1.1941.265 1.230 1.316 1.172 1.267 1.369 1.195 1.305 1.423 1.219 1.344 1.480 1.243 1.384 1.539 1.268 1.426 1.601 1.294 1.469 1.665 1.319 1.513 1.732 1.346 1.558 1.801 1.373 1.605 1.873 1.400 1.653 1.948 1.428 1.702 2.026 1.457 1.754 2.107 1.4861.806 2.191 5% 6% 7% 1.050 1.060 1.070 1.103 1.124 1.145 1.158 1.191 N.225 1.216 1.262 1.311 1.276 1.338 1.403 1.340 1.419 1.407 1.504 1.606 1.4771.594 1.718 1.551 1.689 1.838 1.629 1.967 1.710 1.898 2.105 1.796 2.012 2.252 1.886 2.133 2.410 1.980 2.261 2.579 2.079 2.397 2.759 2.183 2.540 2.952 2.292 2.693 3.159 2.407 2.854 3.380 2.527 3.026 3.617 2.653 3.2073.870 8% 1.080 1.166 1.260 1.360 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 3.426 3.700 3.996 4.316 4.661 9% 10% 1.090 1.100 1.1881.210 1.295 1.331 1.4121.464 1.539 1.677 1.772 1.828 1.949 1.993 2.144 2.172 2.358 2.367 2.594 2.580 2.853 2.813 3.138 3.066 3.452 3.342 3.798 4.177 3.970 4.595 4.328 5.054 4.717 5.560 5.142 6.116 5.604 6.727 14% 1.140 1.300 1.482 1.689 1.925 2.195 2.502 2.853 3.252 3.707 4.226 4.818 5.492 6.261 7.138 8.137 9.276 10.58 12.06 13.74 15% 1.150 1.323 1.521 1.749 2.011 2.313 2.660 3.059 3.518 4.046 4.652 5.350 6.153 7.076 8.137 9.358 10.76 12.38 14.23 16.37 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 6.130 6.866 7.690 8.613 9.646 1.116 1.127 1.138 1.149 1.161 3.642 1.173 1.184 1.196 1.208 1.220 Print Done i Reference 2. 0 2120 1.319 1.346 1.000 1.732 1.801 T.130 1.149 1.161 1.173 1.184 1.196 1.208 1.220 1.232 1.486 1.516 1.546 1.577 1.608 1.641 2.13 2.261 2.397 2.540 2.693 2.854 3.026 3.207 3.400 3.604 3.820 4.049 4.292 4.549 4.822 5.112 5.418 5.743 1.873 1.948 2.026 2.107 2.191 2.279 2.370 2.465 2.563 2.666 2.772 2.883 2.999 3.119 3.243 4.801 7.107 1.000 1.980 2.079 2.183 2.292 2.407 2.527 2.653 2.786 2.925 3.072 3.225 3.386 3.556 3.733 3.920 4.116 4.322 7.040 11.47 J.000 3.342 3.642 3.970 4.328 4.717 5.142 5.604 6.109 6.659 7.258 7.911 8.623 9.399 10.25 11.17 12.17 13.27 2.579 2.937 2.759 3.172 2.952 3.426 3.159 3.700 3.380 3.996 3.617 4.316 3.870 4.661 4.1415.034 4.430 5.437 4.741 5.871 5.072 6.341 5.427 6.848 5.807 7.396 6.214 7.988 6.649 8.627 7.1149.317 7.612 10.06 1.754 1.806 1.860 1.916 1.974 2.033 2.094 2.157 2.221 2.288 2.357 2.427 3.262 4.384 1.245 3.798 4.177 4.595 5.054 5.560 6.116 6.727 7.400 8.140 8.954 9.850 10.83 11.92 13.11 14.42 15.86 4.887 5.474 6.130 6.866 7.690 8.613 9.646 10.80 12.10 13.55 15.18 17.00 0.105 7.076 8.137 9.358 10.76 12.38 14.23 16.37 18.82 21.64 24.89 28.63 3.482 6.261 7.138 8.137 9.276 10.58 12.06 13.74 15.67 17.86 20.36 23.21 26.46 30.17 34.39 39.20 44.69 50.95 1.257 1.270 1.282 32.92 1.293 1.673 19.04 37.86 21,32 23.88 1.776 1.811 2.208 26.75 29.96 43.54 50.07 57.58 66.21 267.9 1,084 10.29 14.97 21.72 2.692 18.42 29.46 46.90 7002 Print Done

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