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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
1 $168,000 $141,000
2138,000165,000
3119,000113,000
4108,00079,000
533,00068,000
Total $566,000 $566,000
Each project requires an investment of $306,000. 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%
10.9430.9090.8930.8700.833
20.8900.8260.7970.7560.694
30.8400.7510.7120.6580.579
40.7920.6830.6360.5720.482
50.7470.6210.5670.4970.402
60.7050.5640.5070.4320.335
70.6650.5130.4520.3760.279
80.6270.4670.4040.3270.233
90.5920.4240.3610.2840.194
100.5580.3860.3220.2470.162
Required:
1a. Compute the cash payback period for each product.
Cash Payback Period
Plant Expansion
2 years
Retail Store Expansion
2 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
Present value of net cash flow total $fill in the blank 3
$fill in the blank 4
Less amount to be invested $fill in the blank 5
$fill in the blank 6
Net present value $fill in the blank 7
$fill in the blank 8
2. 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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