F-15

Comparing payback period and discounted payback period Mathew, Inc, is debating using the payback period versus the discounted payback period for small-dollar projects. The company's information officer has submitted a new computer project with a cost of $18,000. The cash flow will be $6,000 each year for the next five years. The cutoff period used by the company is 3 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 What is the payback period for the project? years (Round to one decimal place) Calculate the discounted payback period for the project at any positive discount rate, say 1%. the 3-year cutoff period. (Select from the The discounted payback period for the project is drop-down menu.) Therefore, with the payback period the project is a project is a so the selection of the method whereas with the discounted payback period the (Select from the drop-down menus.)