Question: Tom s Auto Service, Inc. is considering two projects. Project A has a cost of $ 3 0 , 0 0 0 and will provide

Toms Auto Service, Inc. is considering two projects. Project A has a cost of $30,000 and will provide cash flows of $8,000 per year for 5 years. Project B has a cost of $28,000 and will provide cash flows of $5,600 per year for 5 years. If the firm uses the Payback method to accept or reject projects, which project should be selected?
Project A: PB =3.75 years
Project B: PB =.20 years
Project A: PB =.27 years
Project B: PB =5.0 years
None of the answers provided is correct.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!