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Assume a $95,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1 $ 35,000 $ 40,000 2 30,000 35,000
Assume a $95,000 investment and the following cash flows for two alternatives.
| Year | Investment A | Investment B | ||||
| 1 | $ | 35,000 | $ | 40,000 | ||
| 2 | 30,000 | 35,000 | ||||
| 3 | 20,000 | 25,000 | ||||
| 4 | 20,000 | |||||
| 5 | 20,000 | |||||
|
| ||||||
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 $20,000,000 instead of $20,000, would your answer change under the payback method?
| Yes | |
| No |
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