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Payback method Assume a $90,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1................ $25,000 $40,000 2................ 30,000 40,000

Payback method Assume a $90,000 investment and the following cash flows for two alternatives.

Year

Investment A

Investment B

1................

$25,000

$40,000

2................

30,000

40,000

3................

25,000

28,000

4................

19,000

5................

25,000

a. Calculate the payback for investment A and B.

b. If the inflow in the fifth year for Investment A was $25,000,000 instead of $25,000, would your answer change under the payback method?

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