Exercise $16-36$ Payback Period; Uneven Cash Flows $($Section $3)($LO $16-1,16-6,16-8)$

Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $$170,465$ and bring in additional sales over the next five years. The projected additional sales revenue in year $1$ is $$78,000,$ with associated expenses of $$26,500.$ The additional sales revenue and expenses from the advertising program are projected to increase by $10$ percent each year. Allegience's tax rate is $30$ percent. $($Hint: The $$170,465$ advertising cost is an expense.$)$

Use Appendix A for your reference. $($Use approprlate factor$($s$)$ from the tables provided.$)$

Required:

Compute the payback period for the advertising program.

Calculate the advertising program's net present value, assuming an after$-$tax hurdle rate of $10$ percent. $($Round your Intermedlate calculations and final answer to the nearest whole dollar.$)$

$\backslash$table$[[,],[1.,$Payback period,,years$],[2,$Net present value,,$]]$

Present Value of $$1\mathrm{.}00(1(1+r{)}^n)$

$\backslash$table$[[$Period$,4\%,6\%,8\%,10\%,12\%,14\%,16\%,18\%,20\%,22\%,24\%,26\%,28\%,30\%,32\%$