The management of Style Networks Inc. is considering two TV show projects. The estimated net cash flows from each project are as follows: After Hours Year Sun Fun $320,000 $290,000 320,000 320,000 290,000 320,000 290,000 After Hours requires an investment of $913,600, while Sun Fun requires an investment of $880,730. No residual value is expected from either project. Present Value of an Annuity of $1 at Compound Interest Yea 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.690 1.626 528 833 1.736 3 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212. 3.791 3.605 3.352 2.99 4.917 355 3.784 3.326 5.582. 4.868 4.160 3.605 6.210 5.335 4.968 4.487 3.837 9 6.802. 5.759 5.328 4.772 4.03 10 7.360 6.145 5.650 5.019 4.192 Required 1a. Compute the net present value for each project. Use a rate of 10% and the present value oran annuity of $1 in the above table. If required, round to the nearest dollar. After Hours Sun Fun Present value of annual net cash flow Less amount to be invested Net present value 1b. Compute a present value. dex for each project. If requi round your answers to two decimal places. red, Present Value Index After Hours Sun Fu 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 table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest percent. After Hours Sun Fun Present value factor for an annuity of $1 of return Internal rate 3. The net present value, present value index, and internal rate of return all indicate that the select TV show is a better financial opportunity compared to the select TV show, though both investments meet the minimum return criterion of 10%. The management of Style Networks Inc. is considering two TV show projects. The estimated net cash flows from each project are as follows: After Hours Year Sun Fun $320,000 $290,000 320,000 320,000 290,000 320,000 290,000 After Hours requires an investment of $913,600, while Sun Fun requires an investment of $880,730. No residual value is expected from either project. Present Value of an Annuity of $1 at Compound Interest Yea 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.690 1.626 528 833 1.736 3 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212. 3.791 3.605 3.352 2.99 4.917 355 3.784 3.326 5.582. 4.868 4.160 3.605 6.210 5.335 4.968 4.487 3.837 9 6.802. 5.759 5.328 4.772 4.03 10 7.360 6.145 5.650 5.019 4.192 Required 1a. Compute the net present value for each project. Use a rate of 10% and the present value oran annuity of $1 in the above table. If required, round to the nearest dollar. After Hours Sun Fun Present value of annual net cash flow Less amount to be invested Net present value 1b. Compute a present value. dex for each project. If requi round your answers to two decimal places. red, Present Value Index After Hours Sun Fu 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 table above. If required, round your present value factor answers to three decimal places and internal rate of return to the nearest percent. After Hours Sun Fun Present value factor for an annuity of $1 of return Internal rate 3. The net present value, present value index, and internal rate of return all indicate that the select TV show is a better financial opportunity compared to the select TV show, though both investments meet the minimum return criterion of 10%
