Park Company is considering two alternative investments The payback period is 3 5 years for investment A and 4 years for investment B (1) If management relies on the payback period, which investment is preferred (2) Why might Parks analysis of these two alternatives lead to the selection of B over ...

1 If all else is equal Investment A would be preferred over Investm ...

Park Company is considering two alternative investments. The payback period is 3.5 years for investment A and

Question:

Park Company is considering two alternative investments. The is 3.5 years for investment A and 4 years for investment B.
(1) If management relies on the which investment is preferred?
(2) Why might Park’s analysis of these two alternatives lead to the selection of B over A?

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...