Ch 26 HW

1. Question
2. PR.26-1.AQuestion
3. PR.26-2.A

Progress:2/2 items

1. eBookCalculatorCash Payback Period, Net Present Value Method, and AnalysisElite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows:

   Year	Plant Expansion	Retail Store Expansion
   1		$ 450,000			$ 500,000
   2	450,000	400,000
   3	340,000	350,000
   4	280,000	250,000
   5	180,000	200,000
   Total	$1,700,000	$1,700,000

   Each project requires an investment of $900,000. A rate of 15% has been selected for the net present value analysis.

   Present Value of $1 at Compound Interest
   Year	6%	10%	12%	15%	20%
   1	0.943	0.909	0.893	0.870	0.833
   2	0.890	0.826	0.797	0.756	0.694
   3	0.840	0.751	0.712	0.658	0.579
   4	0.792	0.683	0.636	0.572	0.482
   5	0.747	0.621	0.567	0.497	0.402
   6	0.705	0.564	0.507	0.432	0.335
   7	0.665	0.513	0.452	0.376	0.279
   8	0.627	0.467	0.404	0.327	0.233
   9	0.592	0.424	0.361	0.284	0.194
   10	0.558	0.386	0.322	0.247	0.162

   Required:1a. Compute the cash payback period for each project.

   	Cash Payback Period
   Plant Expansion	2 years
   Retail Store Expansion	2 years

   1b. Compute the net present value. Use the present value of $1 table above. If required, round to the nearest dollar.

   	Plant Expansion	Retail Store Expansion
   Present value of net cash flow total	$	$
   Less amount to be invested	$	$
   Net present value	$	$