Comparing payback period and discounted payback

period

The company's information officer has submitted a new computer project with a cost of

$16 comma 00016,000.

The cash flow will be

$5 comma 3335,333

each year for the next five years. The cutoff period used by the comcompany is

33

years. The information officer states that it doesn't matter which model the company uses for the decision; the project is clearly acceptable. Demonstrate for the information officer that the selection of the model does matter