Keone Products Company is considering an investment in one of two new product lines. The investment required for either product line is $750,000. The net cash flows associated with each product are as follows:

a. Recommend a product offering to Keone Products Company, based on the cash payback period for each product line.
b. Why is one product line preferred over the other, even though they both have the same total net cash flows through eight periods?

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Year 123 3 4 5 6 7 8 Total Liquid Soap $ 140,000 150,000 160,000 150,000 150,000 100,000 80,000 70,000 $1,000,000 Body Lotion $ 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 $1,000,000