Question
Assume a $45,000 investment and the following cash flows for two alternatives. Year Investment X Investment Y 1 $10,000 $15,000 2 15,000 25,000 3 10,000
Assume a $45,000 investment and the following cash flows for two alternatives.
| Year | Investment X | Investment Y | ||||
| 1 | $10,000 | $15,000 | ||||
| 2 | 15,000 | 25,000 | ||||
| 3 | 10,000 | 10,000 | ||||
| 4 | 20,000 | |||||
| 5 | 20,000 | |||||
|
| ||||||
a. Calculate the payback for investment X and Y. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
b. Which alternative would you select under the payback method?
| Investment X | |
| Investment Y |
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Handbook Of The Economics Of Finance
Authors: George M. Constantinides, Milton Harris, Rene M. Stulz
1st Edition
044459406X, 978-0444594068
