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Project A costs $1,000 and has annual cash flows of $400, $600, and $300. Project B costs $1,500 and has annual cash flows of $500,
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Project A costs $1,000 and has annual cash flows of $400, $600, and $300. Project B costs $1,500 and has annual cash flows of $500, $500, $500, and $10,000. Based on having the shortest payback period, which project is better? Is this really the best decision? If not, what is the problem with payback period criteria? Show work and formulas without using excel.
Project A costs $1,000 and has annual cash flows of $400, $600, and $300. Project B costs $1,500 and has annual cash flows of $500, $500, $500, and $10,000. Based on having the shortest payback period, which project is better? Is this really the best decision? If not, what is the problem with payback period criteria? Show work and formulas without using excel.
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