Q2. Mohammed operates a chain of sandwich shops. The company is considering two possible expansion...
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Q2. Mohammed operates a chain of sandwich shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,600,000. Expected annual net cash inflows are $1,600,000, with zero residual value at the end of 10 years. . Plan B, Mohammed would open three larger shops at a cost of $8,300,000. This plan is expected to generate net cash inflows of $1,090,000 per year for 10 years, the estimated useful life of the properties. Estimated residual value for Plan B is $1,300,000. Mohammed uses straight-line depreciation and requires an annual return of 9%
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