Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project…

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

1
$100,000

$84,000

2
82,000

98,000

3
71,000

67,000

4
64,000

47,000

5
20,000

41,000

Total
$337,000

$337,000

Each project requires an investment of $182,000. A rate of 12%
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
0.890
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

6
0.705
0.564
0.507
0.432
0.335

7
0.665
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

Total present value of net cash flow
$
$

Less amount to be invested

Net present value
$
$