TB MC Qu. 24-80 (Algo) Porter Company is analyzing two...

Porter Company is analyzing two potential investments.

	Project X	Project Y
Initial investment	$ 77,470	$ 65,000
Net cash flow:
Year 1	26,500	4,500
Year 2	26,500	28,500
Year 3	26,500	28,500
Year 4	0	20,000

If the company is using the payback period method, and it requires a payback of three years or less, which project(s) should be selected?

Multiple Choice

• Project Y.

• Project X.

• Both X and Y are acceptable projects.

• Neither X nor Y is an acceptable project.

• Project Y because it has a lower initial investment.