Bliss Beauty Products is considering an investment in one of two new product lines. The investment required for either product line is $2,940,000. The net cash flows associated with each product are shown next. Year Shampoo/Conditioner Body Wash 1 $707,000 $420,000 2 664,000 420,000 3 564,000 420,000 4 585,000 420,000 5 420,000 420,000 6 200,000 420,000 7 110,000 420,000 8 110,000 420,000 Total $3,360,000 $3,360,000 a. Recommend a product offering to Bliss Beauty Products, based on the cash payback period for each product line. Shampoo/Conditioner Payback period for Shampoo/Conditioner: 3 years Payback period for Body Wash: 5 years b. All of the following statements are true regarding the product lines except: The cash payback periods are different between the two product lines. The Body Wash earns cash faster than does the Shampoo/Conditioner. The cash payback method emphasizes the initial years' net cash flows in determining the cash payback period. The project with the greatest net cash flows in the early years of the project life will be favored over the one with less net cash flows in the initial years. 2. c. Assume that instead of $564,000 of cash flows in Year 3 and $585,000 in Year 4, the Shampoo/Conditioner had cash flows of $614,000 in Year 3 and $675,000 in Year 4. What would be the cash payback period assuming that the cash flows occur uniformly throughout the year? 4 years, 8 months Feedback Area