Social Circle 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 $ 125,000. A rate of 10% has been selected for the net present value analysis.

Instructions
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 (Exhibit 1).
2. Prepare a brief report advising management on the relative merits of each of the twoproducts.

Pro Gamer 70,000 55,000 35,000 30,000 30,000 $220,000 Yeat Sound Celar 65,000 60,000 25,000 25,000 45,000 $220,000 Total