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A company plans to undertake an expansion project and is evaluating two proposals, A and B. Proposal A Proposal B Year 0 -$200,000 -$200,000 Year
A company plans to undertake an expansion project and is evaluating two proposals, A and B.
Proposal A Proposal B
Year 0 -$200,000 -$200,000 Year 1 $50,000 $70,000 Year 2 $50,000 $50,000 Year 3 $50,000 $45,000 Year 4 $50,000 $40,000 Year 5 $50,000 $40,000
Using the payback method which project would you select?
1. | Project B because the Payback period is 3.875 year | |
2. | Project A because the payback period is 4 years | |
3. | Project B because the payback period is 3.825 years. | |
4. | Project A because the payback period is 3.625 years. |
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