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Given the cash flow of two projectsA and Bin the following table, LOADING... , and using the payback period decision model, which project(s) do you
Given the cash flow of two
projectsA
and
Bin
the following table,
LOADING...
,
and using the payback period decision model, which project(s) do you accept and which project(s) do you reject if you have a
3-year
cutoff period for recapturing the initial cash outflow? For payback period calculations, assume that the cash flow is equally distributed over the year.
Cash Flow | A | B | ||
Cost | $12,000 | $95,000 | ||
Cash flow year 1 | $6,000 | $19,000 | ||
Cash flow year 2 | $6,000 | $9,500 | ||
Cash flow year 3 | $6,000 | $38,000 | ||
Cash flow year 4 | $6,000 | $28,500 | ||
Cash flow year 5 | $6,000 | $0 | ||
Cash flow year 6 | $6,000 | $0 |
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