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Assume a company is going to make an investment of $460,000 in a machine and the following are the cash flows that two different products
Assume a company is going to make an investment of $460,000 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 |
$195,000 | $145,000 |
195,000 | 180,000 |
60,000 | 60,000 |
20,000 | 85,000 |
A. Calculate the payback period of each product. Round your answers to 2 decimal places.
Option A, Product A | ___ years |
Option B, Product B | ___2 years |
B. Which of the two options would you choose based on the payback method?
(Option A, Product A; Option B, Product B)
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