Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows: Excel Year 1 2 3 4 5 Total Sound Cellar $ 65,000 60,000 25,000 25,000 45,000 $220,000 Pro Gamer $ 70,000 55,000 35,000 30,000 30,000 $220,000 Each product requires an investment of $125,000. A rate of 10% 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). Answer Prepare a brief report advising management on the relative merits of each of the two products. 2. Exhibit 2 Partial Present Value of $1 Table Present Value of $1 at Compound Interest Year 1 2 3 4 5 6 7 8 9 10 6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162