Question
Timeline Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $715,740, and
Timeline Manufacturing Co. is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $715,740, and project Bs cost is $1,201,700. Cash flows from both projects are given in the following table.
Year Project A Project B
1 $86,212 $586,212
2 $313,562 $413,277
3 $427,594 $231,199
4 $285,552
What are their discounted payback periods? (Round answers to 2 decimal places, e.g. 15.25. If discounted payback period exceeds life of the project, enter 0.00 for the answer.)
(1) Discounted payback period of project A = ____________
(2) Discounted payback period of project B + ___________
(3) Which will be accepted with a discount rate of 8 percent? Timeline should choose ____________.
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