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The management of BWERERE has projected the cash flows of project A and B as follows ( TZS 0 0 0 ) YEAR PROJECT X

The management of BWERERE has projected the cash flows of project A and B as

follows (TZS 000)

YEAR PROJECT X PROJECT Y

0 - 10,000 -20,000

1 4,000 10,000

2 5,000 9,000

3 4,000 9,000

4 3,000 7,000

REQUIRED:

a) What is the expected payback period of project X and Y

b) Based on your answer in (a) above which project should the management choose?

c) Based on your answer in (b) above why should the management choose that

project?


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a Expected Payback Period We can calculate the payback period for Project X and Project Y using the following steps Identify the initial investment Pr... blur-text-image

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