Work Part $2$

Question $3,$ E$22-27($similar to$)$

Score: $25\%,25$ of $100$ points

Part $5$ of $10$

Points: $15$ of $45$

consideration by Corey Miltons, the company's owner.

$($Click the icon to view the data for the three projects.$)$

Present Value of $$1$ table

Present Value of Annuity of $$1$ table

Future Value of $$1$ table

Future Value of Annuity of $$1$ table

Read the requirements.

Data table

Requirement $1.$ Because the company's cash is limited$,$ Miltons thinks the payback method should be used to choose between the capital budgeting projects.

a$.$ What are the benefits and limitations of using the payback method to choose between projects?

Benefits of the payback method:

A$.$ Utilizes the time value of money and computes each project's unique rate of return

B$.$ Indicates whether or not the project will earn the company's minimum required rate of return

C$.$ Easy to understand and captures uncertainty about expected cash flows in later years of a project

D$.$ All of the above

Limitations of the payback method:

$\backslash$table$[[,$A$,$B$,$c$,$D$],[1,,$Project A$,$Project B$,$Project C$],[2,$Projected cash outflow,,,$],[3,$Net initial investment,$$5,100,000,$$$5,000,000,$$$6,000,000$