Assume a $6,500 investment and the following cash flows for two alternatives.

Under the payback method, which of the following would be concluded?

A. Investment X should be selected.

B. Investment X & Y have the same payback period.

C. Investment Y should be selected.

D. Neither investment is acceptable under the payback method.

Transcribed Image Text:

Year 1 2 3 4 5 Investment X $1,000 $1,800 $1,700 $2,000 Investment Y $1,300 $2,000 $1,100 $1,500 $ 600 Year 1 2 3 4 5 Investment X $1,000 $1,800 $1,700 $2,000 Investment Y $1,300 $2,000 $1,100 $1,500 $ 600

Answer rating: 100% (QA)

Calculate the pay back periods for both investments as foll... View the full answer