Question: PR 26-28 Cash payback period, net present value method, and analysis Obj. 2, 3 for a service company Gamer, Social Circle Publications Inc. is considering

 PR 26-28 Cash payback period, net present value method, and analysis

PR 26-28 Cash payback period, net present value method, and analysis Obj. 2, 3 for a service company Gamer, Social Circle Publications Inc. is considering two new magazine products. The estimated net 49/465 cash flows from each product are as follows: Year Sound Cellar Pro Gamer $ 65,000 $ 70,000 60,000 55,000 25,D00 35,D00 25,000 30,000 45.000 30,000 Total $720,000 $270.090 Each product requires an investment of $125,090, 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 table appearing in Exhibit 2 of this chapter. 2. Prepare a brief report advising management on the relative merits of each of the two products. PR 26-38 Net present value method present value index. and analysis

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