Question
Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial
Elysian Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of
$28,000; project Helium requires an initial outlay of $30,000. Using the expected cash inflows given for each project in the following table, calculate each project's payback period.
Which project meets Elysian's standards? The payback period of project Hydrogen is how many years?
Table hydrogren helium
year 1 6,500 6,000
year 2 5,500 8,000
year 3 7,000 7,500
year 4 5,000 4,000
year 5 3,000 4,000
year 6 2,500 3,000
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