Question
Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash
Kara, Incorporated, 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 | $ 63,000 | $ 108,000 |
| 1 | 26,000 | 28,000 |
| 2 | 33,800 | 33,000 |
| 3 | 28,000 | 26,000 |
| 4 | 14,000 | 232,000 |
-
What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
-
Which, if either, of the projects should the company accept?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The AMA Handbook Of Financial Risk Management
Authors: John J. Hampton
1st Edition
0814417442, 978-0814417447
