Question: help please! 1 Cash Payback period. Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows


1 Cash Payback period. Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Year Plant Expansion Retail Store Expansion $100,000 $83,000 81,000 98,000 3 70,000 67,000 4 64,000 47,000 5 20,000 40,000 Total $335,000 $335,000 2 Each project requires an investment of $181,000. A rate of 6% 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 0.694 0.890 0.826 0.797 0.756 0.658 3 0.840 0.751 0.579 0.712 0.792 0.482 4 0.683 0.572 0.636 0.567 0.497 0.402 5 0.747 0.621 0.507 0.432 0.335 6 0.564 0.705 Wir semain ng Each project requires an investment of $181,000. A rate of 6% 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 0.893 0.870 0.833 0.909 0.826 2 0.890 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 5 0.747 0.567 0.497 0.621 0.564 0.402 0.335 6 0.705 0.507 0.432 7 0.665 0.513 0.452 0.376 0.327 0.279 0.233 8 0.627 0.467 0.404 0.592 0.424 0.361 0.284 0.194 0.162 10 0.558 0.386 0.322 0.247 Required: 1a. Compute the cash payback period for each project. Cash Payback Period Plant Expansion Retail Store Expansion Previous Next W.TV 6 0.564 0.507 0.432 0.335 0.705 0.665 7 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 Retail Store Expansion 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 2. Because of the timing of the receipt of the net cash flows, the offers a higher
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
