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1a. Compute the net present value for each project. Use a rate of 10% and the present value of an annuity of $1 in the table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest whole dollar. Radio Station TV Station Present value of annual net cash flows 1,236,300 $ 2,219,000 Less amount to be invested 1,184,430 $ 1,998,500 Net present value 51,870 $ 220,500 1b. Compute a present value index for each project. If required, round your answers to two decimal places. Present Value Index Radio Station 1.04 TV Station 1.11 2. Determine the internal rate of return for each project by (a) computing a present value factor for an annuity of $1 and (b) using the present value of an annuity of $1 in the table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest whole percent. Radio Station TV Station Present value factor for an annuity of $1 -174,720 x -186,200 X Internal rate of return 12.29 X % 15.42 X % 3. The net present value, present value index, and internal rate of return all indicate that the tv station is a better financial opportunity compared to the radio station , although both investments meet the minimum return criterion of 10%. Net Present Value Method, Internal Rate of Return Method, and Analysis The management of Quest Media Inc. is considering two capital investment projects. The estimated net cash flows from each project are as follows: Year Radio Station TV Station 1 $390,000 $700,000 2 390,000 700,000 3 390,000 700,000 4 390,000 700,000 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% % 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.352 2.991 6 4.917 4.355 4.111 3.784 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 The radio station requires an investment of $1,184,430, while the TV station requires an investment of $1,998,500. No residual value is expected from either project