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  $118,000  $98,000  
2  96,000  116,000  
3  83,000  79,000  
4  75,000  55,000  
5  24,000  48,000  
Total  $396,000  $396,000 
Each project requires an investment of $214,000. A rate of 20% 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 product.
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  
Present value of net cash flow total  $  $ 
Less amount to be invested  $  $ 
Net present value  $  $ 
2. Because of the timing of the receipt of the net cash flows, the
1a. Compute the cash payback period for each product.
Cash Payback Period  
Plant Expansion 
2 years 
Retail Store Expansion 
2 years 
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  
Present value of net cash flow total  $258773  $253685 
Less amount to be invested  214000  214000 
Net present value  $44773  $39685 
2. Because of the timing of the receipt of the net cash flows, the
plant expansion
offers a higher net present value
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