% P12-62B (similar to) Question Help Java Joe Inc. operates a chain of snack shops. The company is considering two possible expansion plans. Plan A would open eight smaller shops at a cost of $8,940,000. Expected annual net cash inflows are $1,750,000 with zer residual value at the end of ten years. Under Plan B, Java Joe would open three larger shops at a cost of $8,640,000. This plan is expected to generate net cash inflows of $1,100,000 per year for ten years, the estimated life of th properties. Estimated residual value is $1,000,000. Java Joe uses straight-line depreciation and requires an annual return of 10% (Click the icon to view the present value annuity factor table) (Click the icon to view the present value factor table) (Click the icon to view the future value annuity factor table) (Click the icon to view the future value factor table.) Read the requirements Requirement 1. Compute the payback period, the ARR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgeting models? Begin by computing the payback period for both plans. (Round your answers to one decimal place.) Plan A (in years) Plan B (in years) 5.1 7.9 Now rmute the ARR (arruntina te nf rahurn far hath nlang (Round the narrantanne in the nearest tenth narrant Enter any number in the edit fields and then click Check Answer. 6 parts remaining Clear All Check Answer - Requirements 1. Compute the payback period, the ARR, and the NPV of these two plans. What are the strengths and weaknesses of these capital budgeting models? 2. Which expansion plan should Java Joe choose? Why? 3. Estimate Plan A's IRR. How does the IRR compare with the company's required rate of retum? Done