N 1. a. Initial investment: $900,000 Year 1 Year 2 Year 3 Year 4 Year 5 Plant Expansion Net Cash Cumulative Net Flow Cash Flows $ 450,000 $ 450,000 450,000 900,000 340,000 280,000 180,000 Retail Store Expansion Net Cash Cumulative Net Flow Cash Flows $ 500,000 $ 500.000 400,000 900.000 350.000 250,000 200,000 The Plant Expansion project achieves payback in Year 2 The Retail Store Expansion project achieves payback in Year 2 Either expansion project is recommended, based on the cash payback period 1 4 Net Present Value Analysis 1. b. Plant expansion, $305,040 PR 26-2A Cash payback period, net present value method, and analysis OBJ. 2,3 Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: X Year 1 2 3 4 5 Total Plant Expansion $ 450,000 450,000 340,000 280,000 180,000 $1,700,000 Retail Store Expansion $ 500,000 400,000 350,000 250,000 200,000 $1,700,000 Each project requires an investment of $900,000. A rate of 15% has been selected for the net present value analysis. Instructions 1. Compute the following for each product: a. Cash payback period. b. The net present value. Use the present value of $1 table appearing in this chapter (Exhibit 2). Prepare a brief report advising management on the relative merits of each project 2