Lajos 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 $1 table.) (Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value of Ordinary Annuity of $1 table.) 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 0 More Info The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,500,000. Expected annual net cash inflows are $1,525,000 for 10 years, with zero residual value at the end of 10 years. Under Plan B, Lajos Company would open three larger shops at a cost of $8,150,000 This plan is expected to generate net cash inflows of $1,030,000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan B is $1,200,000. Lajos Company uses straight-line depreciation and requires an annual return of 10%. Print Done Requirements 1. Compute the payback, the ARR, the NPV, and the profitability index of these two plans. 2. What are the strengths and weaknesses of these capital budgeting methods? 3. Which expansion plan should Lajos Company choose? Why? 4. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of return? Print Done X i Reference Periods 0.933 0.279 1% 2% 3% 4% 5% 0.990 0.980 0.971 0.962 0.952 0.980 | 0.961 0.943 0.925 0.907 0.971 0.942 0.915 0.889 0.864 0.961 0.924 0.888 0.855 0.823 0.951 0.906 0.863 0.822 0.784 0.942 0.888 0.837 0.790 0.746 0.871 0.813 0.760 0.711 0.853 0.789 0.731 0.677 0.914 0.837 0.766 0.703 | 0.645 0.905 0.820 0.744 0.676 0.614 0.896 0.804 0.722 0.650 0.585 0.788 0.701 0.557 0879 0.773 0.681 0.601 0.530 0.870 0.758 0.661 0.577 0.505 0.861 0.743 0.642 0.555 0.481 0.853 0.728 10623 0.623 0.534 0.458 .844 0.714 0.605 0.513 0.436 0.700 0.587 0.494 0.416 0.828 0.686 0.570 | 0.475 | 0.396 0.820 0.673 0.554 0.456 0.377 0.811 0.660 0.538 0.439 0.359 0.803 0.647 0.522 0.422 0.342 0.795 0.634 0.507 0.406 0.326 0.788 0.622 0.492 0.390 0.310 0.780 0.610 0.478 0.375 0.295 0.772 0.598 0.464 0.361 0.281 0.586 0.450 0.347 0.268 0.574 0.437 0.333 0.255 0.563 0.424 0.321 0.243 0.742 0.552 0.412 0.308 0.231 0.672 0.453 0.307 0.208 0.142 0.372 0.228 0.141 0.087 0.887 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.294 0.278 0.262 0.247 0.233 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 140 0.625 Present Value of $1 7% 8% 9% 0.935 0.926 0.917 0.873 0.857 0.842 0.816 0.794 0.772 0.763 0.735 0.708 0.713 0.681 0.650 0.666 0.630 0.596 0.623 0.583 0.547 0.5820.540 0.502 0.544 0.500 0.460 0.508 0.463 0.422 0.475 0.429 0.388 0.444 0.397 0.356 0.415 0.368 0.326 0.388 0.340 0.299 0.362 0.315 0.275 0.3390.292 0.252 0.317 0.270 0.231 0.296 0.250 0.212 0.277 0.232 0.194 0.258 0.215 | 0.178 0.242 0.199 | 0.164 0.226 0.184 0.150 0.211 0.170 0.138 0.197 0.158 0.126 | 0.184 0.146 0.116 0.172 0.135 0.106 | 0.161 0.125 0.098 | 0.150 0.116 0.090 | 0.141 0.107 0.082 0.131 0.099 0.075 0.067 0.046 0.032 0.034 0.021 0.013 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 14% 15% 16% 18% 20% 0.877 0.870 0.862 0.847 0.833 0.769 0.756 0.743 0.7180.694 0.675 0.658 0.641 0.609 0.579 0.592 0.572 0.552 0.516 0.482 0.519 0.497 0.476 0.437 0.402 0.456 0.432 0.410 0.370 0.335 400 0.376 0.354 0.314 0.351 0.327 0.305 0.266 0.233 0.308 0.284 0.263 0.225 0.194 0.270 0.247 0.227 0.191 0.162 0.237 0.215 0.1950.162 0.135 0.208 0.187 0.168 0.137 0.112 0.182 0.163 0.145 | 0.116 0.093 0.160 0.141 0.125 0.099 0.078 0.140 0.123 0.108 0.084 0.065 0.123 | 0.107 | 0.093 0.071 0.054 0.108 0.093 | 0.080 | 0.060 0.045 0.095 0.081 0.069 0.051 0.038 0.083 | 0.070 0.060 0.043 0.031 0.073 | 0.061 0.037 0.026 0.064 0.053 0.044 0.031 0.022 0.056 | 0.046 0.038 0.026 0.018 0.049 | 0.040 0.033 0.022 0.015 0.043 | 0.035 0.028 | 0.019 0.013 0.038 0.030 0.024 | 0.0160.010 0.033 0.026 0.021 0.014 0.009 0.029 0.023 0.018 0.0110.007 0.026 0.0200.016 0.010 0.006 0.017 | 0.014 0.008 0.005 | 0.020 0.015 0.0120.007 0.004 0.005 0.004 0.003 0.001 0.001 0.001 0.001 0.001 0.135 0.123 0.112 0.102 0.092 | 0.084 0.076 0.069 0.063 0.057 0.022 0.009 0.093 0.083 0.074 0.066 0.059 0.053 0.047 0.042 0.037 0.033 0.220 0.207 0.196 0.185 0.174 0.097 0.054 0.022 0.608 0.003 Print Done Done i Reference 2.246 2174 6.728 4.439 253 6.628 Present Value of Ordinary Annuity of $1 Periods | 19 | 20 | 39 | 4 | 59 | 60 | 79 | 80 | 90 | 102 | 123 | 144 | 159 | 160 | 180 | 2014 0.990 | 0.930 | 0.971 1 0.952 | 0.952 | 0.943 | 0.935 | 0.925 | 0.917 | 0.909 | 0.893 | 0.877 | 0.870 | 0.852 | 0.847 | 0.833 1.970 | 1.942 | 1.913 1.285 | 1.25 | 1233 | 1.308 | 1.783 | 1.75 | 1735 | 1.60 | 1.647 | 1.626 | 1.605 1.555 1.528 2.941 | 2224 | 2529 2.775 | | 2.723 | 2.673 2.624 | 2.577 2.531 | 2.487 | 2.402 2.322 | 2283 2.105 3.902 | 3.803 3.717 3.630 | 3.546 | 3465 3.387 | 3.312 3.240 | 3.170 3.037 2914 | 2355 | 2.798 2.690 2.539 4.353 | 4713 4.530 4. 452 | 4.329 4.212 4.100 3.993 3.890 3.791 3.505 3,433 3.352 3.274 3.127 2.991 5.795 5.601 5.417 5.242 | 5.076 4.917 4.767 | 4.623 4.436 4.355 4.111 3.829 3.724 3.635 3.493 3.326 6.472 6.230 | 6.002 | 5.785 5.532 5.389 | 5.206 | 5.033 | 4.253 4554 4.233 4.150 4.039 3.212 3.605 7.652 | 7.325 7.020 6.733 6.463 6.210 5.971 | 5.747 | 5.535 | 5.335 4.953 4.639 4.487 4.344 4.078 3.837 3.556 | 8.162 7.785 7435 |7.103 6.302 6.515 | 6.247 | 5.995 | 5.759 5.328 4.946 | 4.772 4.607 4.303 4.031 9,471 2.933 8.530 3.111 | 7.722 7.350 7.024 | 6.710 | | 6.418 | 6.145 5.650 5.216 5.019 4833 4.494 4.192 10.353 9.787 9.253 8.750 | 8.305 7.237 7.499 7.139 5.805 | 5.495 5.938 5.453 5.234 5,029 4.555 4.327 11.255 | 10.575 9.954 9.335 2.353 8.384 7.943 7.535 7.161 | 6.814 6.194 5.650 5.421 5.197 4.793 12.134 | 11.348 10.635 | 9.935 9.394 8.358 7.904 7487 |7.103 6.424 5.242 5.533 5.342 4.910 4.533 13.004 | 12.106 | 11.296 | 10.553 | 9.899 9.295 8.745 2.244 7.785 |7.357 6.002 5.724 5.458 5.003 4 611 13.855 12.849 11.938 | 11.118 10.330 9.712 9.108 8.559 2.051 | 7.605 6.811 6.142 5.247 5.575 5.092 4.675 14.718 13.573 12.551 | 11.652 | 10.238 | 10.106 9.147 8.351 2.313 | 7.824 5.974 5.265 5.954 5.659 5.162 4.730 15.552 14 292 13.165 12.156 | 11.274 10.477 9.763 9.122 2.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 14 992 13.754 12.659 11.690 10.328 10.059 | 9.372 8.755 2.201 7.250 5.467 6.128 5.218 5.273 17.225 15.678 14.324 13.134 12.035 11.158 10.335 9.604 8.950 2.365 7.355 5.550 | | 5.198 5.877 5.315 18.045 16.351 14.877 13.590 12.452 11,470 10.594 9.818 9.129 2.514 7469 6.623 | 6.259 5.929 5.353 18.357 17.011 15.415 14.029 12.821 11.764 10.835 | 10.017 | 9.292 2.549 7.552 6.637 6.312 5973 4.291 19.650 17.653 15937 14.451 13.163 12.042 11.061 | 10 201 | 9.442 2.772 7.645 6.743 6.359 5.011 5.410 4.909 20.455 18.292 | 16.444 13.489 12.303 11 272 | 10.371 | 9.580 2.883 7.718 6.792 | 6.399 5.044 5.432 4.925 21.243 18.914 | 16.36 15.247 12.550 11.459 | 10.529 | 9.707 | 8.985 7.784 6.835 | 6.434 5.451 4.937 17.413 15.622 11.654 | 10.675 | 9.823 | 9.077 7.243 6.873 6.454 6.097 5.457 4.948 | 17.877 15.933 11.826 | 10210 | 9.929 9.151 7.896 6.905 | 6.491 5.118 5.480 18.327 16.330 11.987 | 10.935 | 10.027 9.237 7.943 6.935 6.514 5.492 18.764 16.653 12.137 | 11.051 | 10.116 9.307 7.924 6.951 5.534 5.152 5.502 844 | 19.188 16.924 12 278 | 11.158 | 10.198 9.370 8.022 6.983 | 6.551 5.165 5.510 22.395 | 19.500 | 17.292 | 15.372 13.765 12.409 | 11.258 | 10.274 | 9.427 8.055 T.003 | 5.555 5.177 5.517 27.355 23.115 | 19.793 | 17.159 | 15.046 13.332 | 11.925 | 10.757 9.779 8.244 7.105 | 6.642 6.233 5.548 39.195 | 31.424 | 25730 | 21.482 | 18 255 | 15.762 | 13.201 | 12 233 | 10.52 | 9.915 | 8.304 7.133 | 5.651 | 5 246 | 5.554 244 4370 5,394 14.357 6.073 19.523 5.135 Print Done Reference Future Value of $1 Periods 9% 10% 5% 1.050 1.103 1.158 1.216 1.276 1.340 1.210 1.331 14% 1.140 1.300 1.482 1.689 1.925 2.195 15% 1.150 1.323 1.521 1.749 2011 1.464 1.611 1.407 6% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 1.898 2.012 2.133 2.261 2.502 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.173 1.184 1.196 1.208 1.220 1.232 1.305 2.313 2.660 3.059 3.518 4.046 4.652 5.350 2.518 6.153 2% 3% 4% 1.020 1.030 1.040 1.040 1.061 1.082 1.061 1.093 1.125 1.0821.126 1.170 1.104 1.159 1.217 1.126 1.1941.265 1.149 1.230 1.316 1.172 1.267 1.369 1.195 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 1.486 1.806 2.191 1.5161.860 2.279 1.546 1.916 2.370 1.577 1.974 2.465 1.608 2.033 2.563 1.641 2.094 2.666 1.673 2.157 2.772 1.707 2.221 2.883 1.741 2.288 2.999 1.776 2.357 3.119 1.811 2.427 3.243 2.208 3.262 4.801 2.692 4.384 7.107 2.397 12% 1.120 1.254 1.405 1.574 1.762 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 10.80 1.477 1.551 1.629 1.710 1.796 1.886 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 7% 8% 1.070 1.080 1.145 | 1.166 1.225 1.260 1.311 1.360 1.403 1.469 1.501 1.587 1.606 1.714 1.718 1.851 1.838 1.999 1.967 2.159 2.105 2.332 2.252 2.410 2.720 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 4.141 5.034 4.430 4.741 5.871 6.341 5.427 6.848 5.807 7.396 6.214 7.988 6.649 8.627 7.114 9.317 7.612 10.06 14.97 29.46 46.90 1.188 1.295 1.412 1.539 1.677 1.828 1.993 2.172 2.367 2.580 2.813 3.066 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 31.41 74.36 1.772 1.949 2.144 2.358 2.594 2.853 3.138 3.452 3.798 4.177 4.595 5.054 5.560 6.116 6.727 7.400 8.140 8.954 9.850 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 15.67 7.076 8.137 9.358 10.76 12.38 14.23 16.37 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 | 10.29 18.42 12.10 5.072 10.83 13.55 15.18 17.00 19.04 21.32 23.88 57.58 1.308 1.321 1.335 1.348 1.489 1.645 11.92 13.11 14.42 15.86 17.45 45.26 117.4 21.72 26.75 29.96 93.05 289.0 44.69 50.95 188.9 700. 2 66.21 267.9 1,084 Print Done i Reference Periods 14% 1.000 2.140 3.440 4.921 6.610 8.536 10.73 15% 1.000 2.150 3.473 4.993 6.742 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.46 11.57 12.68 13.81 14.95 16.10 17.26 2% 1.000 2.020 3.060 4.122 5.204 6.308 7.434 8.583 9.755 10.95 12.17 13.41 14.68 15.97 17.29 18.64 20.01 10% 1.000 2.100 3.310 4.641 6.105 7.716 9.487 11.44 13.58 15.94 18.53 21.38 13.23 3% 1.000 2.030 3.091 4.184 5.309 6.468 7.662 8.892 10.16 11.46 12.81 14.19 15.62 17.09 18.60 20.16 21.76 10.58 16.09 19.34 23.04 27.27 8.754 11.07 13.73 16.79 20.30 24.35 29.00 34.35 40.50 47.58 2452 18.29 37.58 Future Value of Ordinary Annuity of $1 4% 5% 6% 7% 8% 9% 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2.050 | 2.060 2.070 2.080 2.090 3.122 3.153 3.1843.215 3.246 3.278 4.246 4.310 4.375 4.440 4.506 4.573 5.416 5.526 5.637 5.751 5.867 5.985 6.633 6.802 6.975 | 7.153 7.336 7.523 7.898 8.142 8.394 8.654 8.923 9.200 9.214 9.549 9.897 10.260 10.64 11.03 11.03 11.49 11.98 12.49 13.02 12.01 12.58 13.18 13.82 14.49 15.19 13.49 1421 14.97 15.78 16.65 17.56 15.03 15.92 16.87 17.89 18.98 20.14 16.63 17.71 18.88 20.14 21.50 22.95 19.60 22.55 24.21 26.02 20.02 21.58 27.15 29.36 21.82 23.66 33.00 23.70 25.84 36.97 28.13 41.30 27.67 30.54 41.45 46.02 29.78 33.07 36.79 41.00 45.76 51.16 31.97 35.72 39.99 44.87 50.42 56.76 34.25 38.51 49.01 55.46 62.87 36.62 47.00 53.44 60.89 69.53 39.08 44.50 50.82 58.18 66.76 76.79 41.65 47.73 54.86 63.25 73.11 84.70 44.31 51.11 59.16 68.68 79.95 93.32 47.08 63.71 74.48 87.35 102.7 49.97 80.70 95.34 113.0 52.97 73.64 87.35 104.0 124.1 56.08 66.44 79.06 94.46 113.3 136.3 95.03 120.8 154.8 199.6 337.9 209.3 290.3 406.5 573.8 815.1 27.98 31.77 35.95 43.84 12% 1.000 2.120 3.374 4.779 6.353 8.115 10.09 12.30 14.78 17.55 20.65 24.13 28.03 32.39 37.28 42.75 48.88 55.75 63.44 72.05 81.70 92.50 104.6 118.2 133.3 150.3 169.4 190.7 214.6 241.3 767.1 2,400 18.43 68.39 75.84 88.21 102.4 19.61 20.81 22.02 23.24 24.47 25.72 26.97 28.24 22.84 24.30 25.78 27.30 28.85 43.39 41.43 118.8 137.6 159.3 1842 212.8 32.03 25.12 26.87 28.68 30.54 32.45 34.43 36.46 38.55 40.71 42.93 45.22 47.58 75.40 112.8 45.60 51.16 57.28 64.00 71.40 79.54 88.50 98.35 109.2 121.1 1342 148.6 164.5 442. 6 1,164 78.97 91.02 104.8 120.4 138.3 158.7 181.9 208.3 238.5 272.9 312.1 356.8 1,342 4,995 ON 377.2 434.7 259.1 1,779 64.46 84.58 152.7 7,218 Print Done