FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Cash Payback Period, Net Present Value Method, and Analysis
McMorris Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows:
Year
Canadian Cycling
European Hiking
1
$157,000
$131,000
2
128,000
154,000
3
111,000
105,000
4
100,000
74,000
5
31,000
63,000
Total
$527,000
$527,000
<
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
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Transcribed Image Text:Bookmarks Window Help on) eBook Content v2.cengagenow.com C CengageNOWv2 | Online teaching and learning res... ChatGPT Cash Payback Period, Net Present Value Method, and Analysis McMorris Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follows: Year Canadian Cycling European Hiking 1 $157,000 $131,000 2 128,000 154,000 3 111,000 105,000 4 100,000 74,000 5 31,000 63,000 Total $527,000 $527,000 < 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 Check My Work MAY 2 All work saved. Email Instructor Save and Exit tv MacBook Air 80 a : F3 F4 F5 F6 F7 A Previous Submit Assignment f W DII 4 F8 F9 F10 511
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Required:
1a. Compute the cash payback period for each project.
Cash Payback Period
C CengageNOWv2 | Online teaching and learning res...
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Thu May 2
Canadian Cycling
European Hiking
2 years
2 years
1b. Compute the net present value. Use the present value of $1 table presented above. If required, use the minus sign to indicate a negative net present
value.
Present value of net cash flow total
Amount to be invested
Net present value
Canadian Cycling
European Hiking
$
110,779 X
98,517 X
2. All of the following are true regarding the two products except:
a. If funds are unlimited, only the Canadian Cycling product is acceptable to pursue.
b. Both products offer the same total net cash flows.
c. Because of the timing of the receipt of the net cash flows, the Canadian Cycling magazine offers a higher net present value.
d. Both products offer the same cash payback period.
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Transcribed Image Text:Bookmarks Window Help Content v2.cengagenow.com eBook Required: 1a. Compute the cash payback period for each project. Cash Payback Period C CengageNOWv2 | Online teaching and learning res... ChatGPT Thu May 2 Canadian Cycling European Hiking 2 years 2 years 1b. Compute the net present value. Use the present value of $1 table presented above. If required, use the minus sign to indicate a negative net present value. Present value of net cash flow total Amount to be invested Net present value Canadian Cycling European Hiking $ 110,779 X 98,517 X 2. All of the following are true regarding the two products except: a. If funds are unlimited, only the Canadian Cycling product is acceptable to pursue. b. Both products offer the same total net cash flows. c. Because of the timing of the receipt of the net cash flows, the Canadian Cycling magazine offers a higher net present value. d. Both products offer the same cash payback period. Check My Work MAY 2 Previous Next All work saved. Email Instructor Save and Exit Submit Assignment for Grading tv MacBook Air A W
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