EX $16-36($Algo$)$ Payback Period; Uneven Cash Flows $($Section $3)($LO $16-1,16-6,16-8)$

Allegience Insurance Company's management is considering an advertising program that would require an initial

expenditure of $$185,360$ and bring in additional sales over the next five years. The projected additional sales

revenue in year $1$ is $$87,000,$ with associated expenses of $$31,000.$ The additional sales revenue and expenses

from the advertising program are projected to increase by $10$ percent each year. Allegience's tax rate is $30$ percent.

$($Hint: The $$185,360$ advertising cost is an expense.$)$

Use Appendix A for your reference.

Note: Use appropriate factor$($s$)$ from the tables provided.

Required:

Compute the payback period for the advertising program.

Calculate the advertising program's net present value, assuming an after$-$tax hurdle rate of $10$ percent.

Note: Round your intermediate calculations and final answer to the nearest whole dollar.