Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cash Payback Period, Net Present Value Method, and Analysis 1 Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each

image text in transcribed

Cash Payback Period, Net Present Value Method, and Analysis 1 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 $172,000 $144,000 2 141.000 169,000 3 122,000 116,000 4 110,000 81,000 5 34,000 69,000 Total $579,000 $579,000 Each project requires an investment of $313,000. A rate of 6% 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 0.404 0.233 0.467 0.424 0.327 0.284 9 0.592 0.361 0.194 10 0.55 0.386 0.247 0.162 Required: 1a. Compute the cash payback period for each product. Cash Payback Period Plant Expansion Retail Store Expansion 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 Present value of net cash flow total Less amount to be invested Net present value 2. Because of the timing of the receipt of the net cash flows, the offers a higher

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions