Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Assume a company is going to make an investment of $445,000 in a machine and the following are the cash flows that two different products
Assume a company is going to make an investment of $445,000 in a machine and the following are the cash flows that two different products would bring in years one through four.
| Option A, Product A | Option B, Product B |
| $185,000 | $155,000 |
| 185,000 | 175,000 |
| 60,000 | 65,000 |
| 25,000 | 60,000 |
A. Calculate the payback period of each product. Round your answers to 2 decimal places.
| Option A, Product A | years |
| Option B, Product B | years |
B. Which of the two options would you choose based on the payback method?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started