Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follow: Year Sound Cellar Pro Gamer 1 65,000 70,000 2 60,000 55,000 3 25,000 35,000 4 25,000 30,000 5 45,000 30,000 Total 220,000 220,000 Each product requires an investment of $125,000. A rate of 10% has been selected for the net present value analysis. A. Calculate the payback period for the two products. B. Calculate the net present value for the two products.
Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follow: Year Sound Cellar Pro Gamer 1 65,000 70,000 2 60,000 55,000 3 25,000 35,000 4 25,000 30,000 5 45,000 30,000 Total 220,000 220,000 Each product requires an investment of $125,000. A rate of 10% has been selected for the net present value analysis. A. Calculate the payback period for the two products. B. Calculate the net present value for the two products.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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Question
Social Circle Publications Inc. is considering two new magazine products. The estimated net cash flows from each product are as follow:
|
Year |
Sound Cellar |
Pro Gamer |
|
1 |
65,000 |
70,000 |
|
2 |
60,000 |
55,000 |
|
3 |
25,000 |
35,000 |
|
4 |
25,000 |
30,000 |
|
5 |
45,000 |
30,000 |
|
Total |
220,000 |
220,000 |
Each product requires an investment of $125,000. A rate of 10% has been selected for the
A. Calculate the payback period for the two products.
B. Calculate the net present value for the two products.
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