McMorris Publications Inc. Is considering two new magazine products. The estimated net cash flows from each product are as followsYearCanadian CyclingEuropean Hiking$157,000$132,000129,000154,000111,000106,000101,00074,00031,00063,000Total$529,000$529,000Present Value of $1 at Compound InterestYear6%10%12%15%20%0.9430.9090.8930.8700.8330.8900.8260.7970.7560.6940.8400.7510.7120.6580.5790.7920.6830.6360.5720.4820.7470.6210.5670.4970.4020.7050.5640.5070.4320.3357.0.6650.5130.4520.3760.2790.6270.4670.4040.3270.2330.5920.4240.3610.2840.194100.5580.3860.3220.2470.162Each product requires an Investment of $286,000. A rate of 20% has been selected for the net present value analysts.Check My Wark oBookPrint hem0.7050.5640.5070.4320.3357.0.6650.5130.4520.3760.2790.6270.4670.4040.3270.2330.5920.4240.3610.2840.194100.5580.3860.3220.2470.162Each product requires an Investment of $256,000. A rate of 20% has been selected for the net present value analysis.Required:la. Compute the cash payback perlod for each project.Cash Payback PeriodCanadian Cycing2 years vEuropean Hiking2 years v1b. Compute the net present value. Use the present value of $1 table presented above. If requlred, use the minus sign to Indicate a negative net present value.Canadian Cycling European HikingPresent value of net cash flow totalAmount to be InvestedNet present value2. 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

McMorris Publcations Inc. Is considering two new magazine products. The estimated net cash flows from each product are as follows: Year Canadian Cycling European Hiking $157,000 $132,000 2 129,000 154,000 3 111,000 106,000 101,000 74,000 31,000 63,000 Total $529,000 $529,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 7. 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Each product requires an Investment of $286,000. A rate of 20% has been selected for the net present value analysis.

McMorris Publcations Inc. Is considering two new magazine products. The estimated net cash flows from each product are as follows: Year Canadian Cycling European Hiking $157,000 $132,000 2 129,000 154,000 3 111,000 106,000 101,000 74,000 31,000 63,000 Total $529,000 $529,000 Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 7. 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Each product requires an Investment of $286,000. A rate of 20% has been selected for the net present value analysis.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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