Question
Assume a $260,000 investment and the following cash flows for two products: Year Product X Product Y 1 $90,000 $80,000 2 80,000 70,000 3 81,000
Assume a $260,000 investment and the following cash flows for two products:
| Year | Product X | Product Y |
| 1 | $90,000 | $80,000 |
| 2 | 80,000 | 70,000 |
| 3 | 81,000 | 50,000 |
| 4 | 40,000 | 80,000 |
a. Calculate the payback for products X and Y.
| Product X | years | |
| Product Y | years |
b. Which alternative would you select under the payback method?
-
Product X is selected
-
Product Y is selected
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
8th Edition
0324258917, 9780324258912
