Question
Coffer Co. is analyzing two projects for the future. Assume that only one project can be selected. If the company is using the payback period
Coffer Co. is analyzing two projects for the future. Assume that only one project can be selected. If the company is using the payback period method and it requires a payback of three years or less, which project should be selected?
| Project X | Project Y | |
| Cost of machine | $68,000 | $60,000 |
| Net cash flow: | ||
| Year 1 | 24,000 | 4,000 |
| Year 2 | 24,000 | 26,000 |
| Year 3 | 24,000 | 26,000 |
| Year 4 | 0 | 20,000 |
a. Both X and Y are acceptable projects.
b. Project Y.
c. Project X.
d. Neither X nor Y is an acceptable project.
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Cost Accounting Foundations and Evolutions
Authors: Michael R. Kinney, Cecily A. Raiborn
8th Edition
9781439044612, 1439044619, 978-1111626822
