1. Cash Payback Period, A method of analysis of proposed capital investments that focuses on the present value of the cash flows expected from the investments.Net Present Value Method, and Analysis

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

   Year	Plant Expansion		Retail Store Expansion
   1	$149,000		$125,000
   2	122,000		146,000
   3	105,000		100,000
   4	95,000		70,000
   5	30,000		60,000
   Total	$501,000		$501,000

   Each project requires an investment of $271,000. A rate of 15% has been selected for the net present value analysis.

   Present Value of $1 at Compound Interest
   Year	6%	10%	12%	15%	20%
   1	0.943	0.909	0.893	0.870	0.833
   2	0.890	0.826	0.797	0.756	0.694
   3	0.840	0.751	0.712	0.658	0.579
   4	0.792	0.683	0.636	0.572	0.482
   5	0.747	0.621	0.567	0.497	0.402
   6	0.705	0.564	0.507	0.432	0.335
   7	0.665	0.513	0.452	0.376	0.279
   8	0.627	0.467	0.404	0.327	0.233
   9	0.592	0.424	0.361	0.284	0.194
   10	0.558	0.386	0.322	0.247	0.162

   Required:

   1a. Compute the cash payback period for each project.

   	Cash Payback Period
   Plant Expansion	1 year 2 years 3 years 4 years 5 years
   Retail Store Expansion	1 year 2 years 3 years 4 years 5 years

   1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar.

   	Plant Expansion	Retail Store Expansion
   Total present value of net cash flow	$	$
   Less amount to be invested
   Net present value	$	$

   2. Because of the timing of the receipt of the net cash flows, the

   • plant expansion
   • retail store expansion
   offers a higher
   • net present value
   • net cash flow