Question
Assume a $70,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1 $ 15,000 $ 30,000 2 20,000 30,000
Assume a $70,000 investment and the following cash flows for two alternatives.
| Year | Investment A | Investment B | ||||
| 1 | $ | 15,000 | $ | 30,000 | ||
| 2 | 20,000 | 30,000 | ||||
| 3 | 23,000 | 20,000 | ||||
| 4 | 15,000 | |||||
| 5 | 15,000 | |||||
|
| ||||||
a. Calculate the payback for investment A and B. (Round your answers to 2 decimal places.)
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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Global Financial Accounting And Reporting Principles And Analysis
Authors: Peter J. Walton, Walter Aerts
3rd Edition
1408062860, 9781408062869
