# Question

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

Each product requires an investment of $400,000. A rate of 10% has been selected for the net present value analysis.

Instruction

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.

2. Prepare a brief report advising management on the relative merits of each of the two products.

Each product requires an investment of $400,000. A rate of 10% has been selected for the net present value analysis.

Instruction

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.

2. Prepare a brief report advising management on the relative merits of each of the two products.

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