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Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project
Cash Payback Period, 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
$ $
Total $ $
Each project requires an investment of $ A rate of has been selected for the net present value analysis.
Present Value of $ at Compound Interest
Year
Required:
a Compute the cash payback period for each product.
Cash Payback Period
Plant Expansion
years
Retail Store Expansion
years
b Compute the net present value. Use the present value of $ table above. If required, round to the nearest dollar.
Plant Expansion Retail Store Expansion
Present value of net cash flow total $fill in the blank
$fill in the blank
Less amount to be invested $fill in the blank
$fill in the blank
Net present value $fill in the blank
$fill in the blank
Because of the timing of the receipt of the net cash flows, the
plant expansion
offers a higher
net present value
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