Question
MNO Corporation is considering two investment projects, Project Green and Project Yellow, both requiring an initial investment of ZAR 200,000. The expected after-tax cash inflows
MNO Corporation is considering two investment projects, Project Green and Project Yellow, both requiring an initial investment of ZAR 200,000. The expected after-tax cash inflows are:
Year | Cash Flows (Project Green) | Cash Flows (Project Yellow) |
Initial Investment | (200,000) | (200,000) |
1 | 70,000 | 60,000 |
2 | 60,000 | 70,000 |
3 | 50,000 | 60,000 |
4 | 40,000 | 50,000 |
a. Calculate the Payback Period for each project.
b. Which project should be chosen based on the shortest payback period?
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
