Cash Payback Period, Net Present Value Method, and Analysis At Home Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows: Year Home & Garden Music Beat $122,000 $102,000 99,000 119,000 86,000 82,000 78,000 57,000 24,000 49,000 Total $409,000 $409,000 Year Present Value of $1 at Compound Interest 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 0 .558 0.386 0.322 0.247 0.162 10 Each product requires an investment of $221,000. A rate of 10% has been selected for the net present value analysis. Instructions: 1a. Compute the cash payback period for each project. Cash Payback Period Home & Garden years Music Beat years 1b. Compute the net present value. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. 1b. Compute the net present value. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. Home & Garden Music Beat Present value of net cash flow total $ Amount to be invested Net present value 2. All of the following are true regarding the two products except: a. If funds are unlimited, only the Home & Garden product is acceptable to pursue. b. Both products offer the same total net cash flows. C. Because of the timing of the receipt of the net cash flows, the Home & Garden magazine offers a higher net present value. d. Both products offer the same cash payback period. Select