Question: Evaluate the following projects using the payback method assuming a rule of 4 years for payback. Year Project A Project B 0. -10,000 -10,000 1.
Evaluate the following projects using the payback method assuming a rule of 4 years for payback.
Year Project A Project B
0. -10,000 -10,000
1. 4000 4000
2. 4000 3000
3. 4000 2000
4. 0. 1,000,000
| A. | Project A can be accepted because the payback period is 2.5 years but Project B cannot be accepted because its payback period is longer than 3 years. | |
| B. | Project B should be accepted, since there is a $1,000,000 payoff in the 4th year in Project B | |
| C. | Project B should be accepted because you get more money paid back in the long run. | |
| D. | Both projects can be accepted because the payback is less than 4 years. |
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