Net Present Value Analysis Present Value of Net Cash Flow Sound Pro Cellar Garner 59,091 49,587 $ Present Value of $1 at 10% Year 1 0.909 Year 2 0.826 Year 3 0.751 Year 4 0.683 Year 5 0.621 Total Amount to be invested Net present value Net Cash Flow Sound Pro Cellar Gamer $ 65,000 $ 70,000 60,000 55,000 25,000 35,000 25,000 30,000 45,000 30,000 $ 220,000 $ 220,000 125,000 47,477 $ 125,000 49,505 $ Pro Gamer magazine is recommended, based on its higher net present value. A. Initial investment: $125,000 Year 1 Year 2 Year 3 Year 4 Year 5 Sound Cellar Net Cash Cumulative Net Flow Cash Flows $ 65,000 $ 65,000 60,000 125,000 25,000 150,000 25,000 175,000 45,000 220,000 Pro Gamer Net Cash Cumulative Net Flow Cash Flows $ 70,000 $ 70,000 55,000 125,000 35,000 160,000 30,000 190,000 30,000 220,000 The Sound Cellar magazine achieves payback in Year 2 The Pro Gamer magazine achieves payback in Year 2 Either magazine is recommended, based on the cash payback period