. Payback and Discounted Returns. Ignore tax impacts. Carol Towel. manager of Timber Ridge Investments. uses the payback method in selecting investment alternatives. She states that, "If I can recover the investment in three years, I'm virtually in the same position as another investor who earns an 18 percent internal rate of return on a 5 -year investment." In her business, investments produce uniform returns over a 5 -year period and have no salvage value. Three investment choices are outlined as follows:

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1. Which, if any, of the investment choices meet the 3 -year payback criterion?
2. Evaluate the three choices by the NPV method with a minimum rate of return of 18 percent, and compare the results with those found in Part (1).
3. Comment on her statement.

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Choice 1 Choice 2 Choice 3 Investment.. $90,000 $24,000 $44,000 Annual return for each of 5 years 30,000 9,000 12,500