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A company is trying to decide between two projects. Project Musky will cost $250,000 to develop and have a net annual cash flow of $45,000.
A company is trying to decide between two projects. Project Musky will cost $250,000 to develop and have a net annual cash flow of $45,000. Project Perch will cost $300,000 to develop and have a net annual cash flow of $52,000. The company makes decisions based on payback period. Which project should they pick and why? For the one they should not pick, what would the net annual cash flow need to be to make it equal to the one they should pick?
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