Question
Global Toys, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year
Global Toys, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available.
| Year | Cash Flow A | Cash Flow B | ||
| 0 | $ | 61,000 | $ | 106,000 |
| 1 | 25,000 | 27,000 | ||
| 2 | 32,600 | 32,000 | ||
| 3 | 27,000 | 27,000 | ||
| 4 | 13,000 | 234,000 | ||
What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
| Payback period | |
| Project A | years |
| Project B | years |
Which, if either, project(s) should the company accept?
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Earnings Quality
Authors: Andrew P.C.
1st Edition
1521507724, 978-1521507728
