Audio Zone Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:

Each project requires an investment of $740,000. A rate of 20% has been selected for the net present value analysis.

Instructions
1. Compute the following for each project:
a. Cash payback period.
b. The net present value. Use the present value of $1 table appearing in this chapter.
2. Prepare a brief report advising management on the relative merits of each of the twoprojects.

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Plant Retail Store Year Expansion Expansion 270,000 250,000 220,000 250,000 260,000 $1,250,000 $ 250,000 250,000 240,000 240,000 270,000 $1,250,000 Total