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

YearSound CellarPro Gamer1 $ 65,000 $ 70,000 2 60,000 55,0003 25,000 35,0004 25,000 30,0005 45,000 30,000Total$220,000$220,000

Each product requires an investment of $125,000. A rate of 10% has been selected for the net present value analysis.

Present Value of $1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83320.8900.8260.7970.7560.69430.8400.7510.7120.6580.57940.7920.6830.6360.5720.48250.7470.6210.5670.4970.40260.7050.5640.5070.4320.33570.6650.5130.4520.3760.27980.6270.4670.4040.3270.23390.5920.4240.3610.2840.194100.5580.3860.3220.2470.162

Required:

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

Cash Payback PeriodSound Cellar1 year2 years3 years4 years5 yearsPro Gamer1 year2 years3 years4 years5 years

1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar.

Sound CellarPro GamerPresent value of net cash flow total$fill in the blank 3$fill in the blank 4Less amount to be invested$fill in the blank 5$fill in the blank 6Net present value$fill in the blank 7$fill in the blank 8

2. Because of the timing of the receipt of the net cash flows, the..magazine expansion offers a higher .