Stoney Corporation invest $6,500 each in Projects X and Y. Cash flows from these investment are listed below

Investment X Investment Y

Year 1 $1000 $1300

Year 2 1800 2000

Year 3 1700 1100

Year 4 2000 1500

Year 5 600

Calculate the payback in years for each project. Should you choose X or Y using the payback method?

Investment X should be selected.

Investment Y should be selected.

Investment X and Y provide the same payback period.

Answer rating: 100% (QA)

To calculate the payback period for each investment we need to accumulate the cash flows until we recover the initial investment of 6500 for each proj... View the full answer