Kim-Klark Consumer Products Company is considering an investment in one of two new product offerings. The investment required for either product is

$420,000. The net cash flows associated with each product are as follows:.

a. Recommend a product offering to Kim-Klark Consumer Products Company, based on the cash payback period for each product.

b. Why is one product offering preferred over the other, even though they both have the same total net cash flows through eight periods?

Transcribed Image Text:

Product 1 Product 2 Year 1 $ 70,000 $105,000 2 80,000 105,000 3 90,000 105,000 4 90,000 105,000 5 90,000 105,000 6 120,000 105,000 7 140,000 105,000 8 160,000 105,000 Total $840,000 $840,000