Question: Problem 8-3 Calculating Payback [LO 1] Global Toys Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has
Problem 8-3 Calculating Payback [LO 1]
| Global Toys Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. |
| Year | Cash Flow (A) | Cash Flow (B) | ||
| 0 | $ | 55,000 | $ | 95,000 |
| 1 |
| 19,000 |
| 18,000 |
| 2 |
| 27,000 |
| 26,000 |
| 3 |
| 24,000 |
| 28,000 |
| 4 |
| 9,000 |
| 260,000 |
|
| ||||
| Requirement 1: |
| What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) |
|
| Payback period |
| Project A | years |
| Project B | years |
|
| |
| Requirement 2: |
| Should it accept either of them? |
|
|
| (Click to select)Accept project A and reject project BReject both projects A and BAccept project B and reject project AAccept both projects A and B |
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