Perryman Crafts Corp. management is evaluating two independent capital projects that together will cost the company $250,000.

Question:

Perryman Crafts Corp. management is evaluating two independent capital projects that together will cost the company $250,000. The two projects will provide the following cash flows:

Which project will be chosen if the company's payback criterion is three years? What if the company accepts all projects as long as the payback period is less than five years?

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...