Question
Use the following mutually exclusive investment cash flows for the question(s) below: Project Year 0 Year 1 Year 2 Year 3 A -$200 $100 $100
Use the following mutually exclusive investment cash flows for the question(s) below:
| Project | Year 0 | Year 1 | Year 2 | Year 3 |
| A | -$200 | $100 | $100 | $100 |
| B | -$275 | $125 | $125 | $125 |
Based on the payback criterion, which of the following is NOT true?
Multiple Choice
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With a payback cutoff of 2.5 years, both projects are acceptable.
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With a payback cutoff of 1.75 years, only Project A is acceptable.
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With a payback cutoff of three years, both projects are acceptable.
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With a payback cutoff of 1.5 years, neither project is acceptable.
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If you choose the project that pays back the fastest, Project A is preferred.
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University Finances Accounting And Budgeting Principles For Higher Education
Authors: Dean O. Smith
1st Edition
1421427257, 978-1421427256
