Question (#21): Investments: Requirement 1: Options: Project L,M,N Requirement 2:

Consider the following three projects. All three have an initial investment of $1,100,000 (Click the icon to view the investments.) Requirements 1. Determine the payback period of each project. Rank the projects from most desirable to least desirable based on payback. 2. Are there other factors that should be considered in addition to the payback period? Year Ovo AW = Project L Annual Accumulated $ 220,000 $ 220,000 $ 220,000 440,000 220,000 660,000 220,000 880,000 220,000 1,100,000 220,000 1,320,000 220,000 1,540,000 220,000 1,760,000 Net Cash Inflows Project M Project N Annual Accumulated Annual Accumulated 170,000 $ 170,000 $ 550,000 $ 550,000 270,000 440,000 550,000 1,100,000 660,000 1,100,000 710,000 1,810,000 760,000 2,570,000 Requirement 1. Determine the payback period of each project. Rank the projects from most desirable to least desirable based on payback. First, determine the payback period of each project. (Enter the payback period as a numeral.) Project Project L Project M Project N Payback period years years years Now, rank the projects from most desirable to least desirable based on payback. Projects - Most to least desirable Requirement 2. Are there other factors that should be considered in addition to the payback period? O A. No. The payback period is the only quantitative factor necessary for a comparison of investments. OB. Yes. The company should consider which projects will generate cash flows after the payback period. In addition, the company should rank the projects based on the results of other evaluation methods (e.g., accounting rate of return, net present value, profitability index, and internal rate of return) and possible qualitative factors. O C. No. The payback period is the only qualitative factor necessary for a comparison of investments