Question
Assume a $52,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1 $15,000 $25,000 2 15,000 15,000 3 15,000
Assume a $52,000 investment and the following cash flows for two alternatives.
| Year | Investment A | Investment B |
| 1 | $15,000 | $25,000 |
| 2 | 15,000 | 15,000 |
| 3 | 15,000 | 20,000 |
| 4 | 10,000 | - |
| 5 | 15,000 | - |
a. Calculate the payback for investment A and B. Round your answers to 2 decimal places.
| Investment A | years | |
| Investment B | years |
b. Which investment would you select under the payback method?
-Investment A
-Investment B
c. If the inflow in the fifth year for Investment A was $15,000,000 instead of $15,000, would your answer change under the payback method?
-Yes
-No
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Financial Management For Nonprofit Human Service Organizations
Authors: Raymond Sanchez Mayers
2nd Edition
0398075131, 9780398075132
