McMorris Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows:

Year	Canadian Cycling	European Hiking
1	$153,000		$128,000
2	126,000		151,000
3	108,000		103,000
4	98,000		72,000
5	31,000		62,000
Total	$516,000		$516,000

Present Value of $1 at Compound Interest
Year	6%	10%	12%	15%	20%
1	0.943	0.909	0.893	0.870	0.833
2	0.890	0.826	0.797	0.756	0.694
3	0.840	0.751	0.712	0.658	0.579
4	0.792	0.683	0.636	0.572	0.482
5	0.747	0.621	0.567	0.497	0.402
6	0.705	0.564	0.507	0.432	0.335
7	0.665	0.513	0.452	0.376	0.279
8	0.627	0.467	0.404	0.327	0.233
9	0.592	0.424	0.361	0.284	0.194
10	0.558	0.386	0.322	0.247	0.162

Each product requires an investment of $279,000. A rate of 15% has been selected for the net present value analysis.

Required:

1a. Compute the cash payback period for each project.

	Cash Payback Period
Canadian Cycling	1 year2 years3 years4 years5 years2 years
European Hiking	1 year2 years3 years4 years5 years2 years

1b. Compute the net present value. Use the present value of $1 table presented above. If required, use the minus sign to indicate a negative net present value.

	Canadian Cycling	European Hiking
Present value of net cash flow total	$fill in the blank 3		$fill in the blank 4
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. All of the following are true regarding the two products except:

1. If funds are unlimited, only the Canadian Cycling product is acceptable to pursue.
2. Both products offer the same total net cash flows.
3. Because of the timing of the receipt of the net cash flows, the Canadian Cycling magazine offers a higher net present value.
4. Both products offer the same cash payback period.