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Cash payback method Keone Products Company is considering an investment in one of two new product lines. The investment required for either product line is
Cash payback method Keone Products Company is considering an investment in one of two new product lines. The investment required for either product line is $750,000. The net cash flows associated with each product are as follows: Liquid Soap Body Lotion Year 1 $140,000 $125,000 2 150,000 125,000 3 160,000 125,000 4 150,000 125,000 5 150,000 125,000 16 100,000 125,000 7 80,000 125,000 8 Total 70,000 125,000 $1,000,000 $1,000,000 a. Recommend a product offering to Keone Products Company, based on the cash payback period for each product line. Payback period for liquid soap. 2 150,000 125,000 3 160,000 125,000 4 150,000 125,000 5 150,000 125,000 6 100,000 125,000 7 80,000 125,000 8 70,000 125,000 Total $1,000,000 $1,000,000 a. Recommend a product offering to Keone Products Company, based on the cash payback period for each product line. Payback period for liquid soap Payback period for body lotion b. The project with the net cash flows in the early years of the project life will be favored over the one with the net cash flows in the initial years
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