Cash payback period, net present value method, and analysis for a service company PR 25-2B Obj. 2, 3 Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows: EXCEL TEMPLATE Pro Gamer Sound Cellar Year 70,000 55,000 35,000 30,000 30,000 65,000 60,000 25,000 25,000 45,000 Total $220.000 $22000 ct requires an investment of $125,000. A rate of 10% has been selected for the Each produ net present value analysis. Instructions 1. Compute the following for each product A. Cash payback period. e net present value. Use the present value of $I table appearing in this chapter (Exhibit 2). B. Th Pro Gamer Sound Cellar Net Cash Flow Net Cash Flow Cumulative Net Cash Flows Cumulative Net Cash Flows $70,000 Year 1 Year 2 Year 3 Year 4 Year 5 S 65,000 S 65,000$ 70,000 55,000 35,000 30,000 30,000 125,000 160,000 190,000 220,000 125,000 150,000 175,000 220,000 25,000 25,000 45,000 Year 2 The Sound Cellar magazine achieves payback in The Pro Gamer magazine achieves payback in Year 2 magazine is recommended, based on the cash payback period. Either B. Net Present Value Analysis Present Value of Net Cash Flow Net Cash Flow Present Value of $1 at 10% 0.909 Sound Cellar 65,000 $ 70,000 Pro Gamer Sound Cellar Pro Gamer Year 1 Year 2 0.826 Year 30.751 Year 4 0.683 Year 5 Total Amount to be invested Net present value 60,000 25,000 25,000 45,000 S 220,000 55,000 35,000 0.621 30,000 $ 220,000 magazine is recommended, based on its higher net present value