A hotel manager wishes to choose between two alternative investments giving the following annual net cash inflows over a 5-year period:

The amount of the investment under either alternative will be $70,000.

a. Using the payback period method, in which year, under both alternatives, will she have recovered the initial investment?

b. Using NPV at 10%, would either alternative be a good investment?LO1

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Year 12345 Alternative 1 Alternative 2 $ 8,400 $24,200 11,600 19,800 17,000 17,200 23,000 10,800 24,000 8,000