Evaluate the following projects using the payback method assuming a rule of 3 years for payback
Year Project A Project B
0 -10,000 -10,000
1 4,000 4,000
2 4,000 3,000
3 4,000 2,000
4 0 1,000,000
A) Project A can be accepted because the payback period is 2.5 years but Project B cannot be accepted because it's payback period is longer than 3 years.
B) Project B should be accepted because even though the payback period is 2.5 years for Project A and 3.001 for project B, there is a $1,000,000 payoff in the 4th year in Project B.
C) Project B should be accepted because you get more money paid back in the long run.
D) Both projects can be accepted because the payback is less than 3 years.
A
You might also like to view...
Ignoring defaults, what is the approximate effective cost of factoring if receivables are sold at a 2% discount and the average collection period is 1 month?
A) 27.43% B) 26.53% C) 24.00% D) 19.40%
All of the following are true about using a pre-existing (packaged) data model, except:
A) it cannot be customized to fit the terms and business rules of a specific organization. B) the modeling projects require less time and money. C) it may be easier to share data with other organizations in the industry. D) it is likely to work well with other applications from the same vendor.