Coffer Co. is analyzing two potential investments.

Project X

Project Y

Cost of machine

$

77,000

$

55,000

Net cash flow:

Year 1

28,000

2,000

Year 2

28,000

25,000

Year 3

28,000

25,000

Year 4

0

20,000

If the company is using the payback period method and it requires a payback of three years or less, which project(s) should be selected?

A) Project Y.

B) Project X.

C) Both X and Y are acceptable projects.

D) Neither X nor Y is an acceptable project.

E) Project Y because it has a lower initial investment.