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Bella Italia, a famous Italian restaurant, is faced with two independent investment opportunities, i.e., opening of their new outlet in one of two prime locations
Bella Italia, a famous Italian restaurant, is faced with two independent investment opportunities, i.e., opening of their new outlet in one of two prime locations that restaurant is considering. The company has an investment policy which requires acceptable projects to recover all costs within 4 years. The company uses the payback period method to assess potential projects. The cash flows for the two projects are as follows: Year Location-1 Location-2 0 -$50,000 -$70,000 1 20,000 27,500 2 36,000 40,000 3 41,000 53,000 4 30,000 22,000 5 12,000 18,000 Which investment project should the company choose
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