A company is considering two projects. Project A Project B Initial investment $200,000 $200,000 Cash inflow Year 1 $60,000 $90,000 Cash inflow Year 2 $60,000 $90,000 Cash inflow Year 3 $60,000 $40,000 Cash inflow Year 4 $60,000 $50,000 Cash inflow Year 5 $60,000 $70,000 What is the payback period for Project B? 02 years 2.5 years 03.5 years 04 years
A company is considering two projects. Project A Project B Initial investment $200,000 $200,000 Cash inflow Year 1 $60,000 $90,000 Cash inflow Year 2 $60,000 $90,000 Cash inflow Year 3 $60,000 $40,000 Cash inflow Year 4 $60,000 $50,000 Cash inflow Year 5 $60,000 $70,000 What is the payback period for Project B? 02 years 2.5 years 03.5 years 04 years
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
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Question
![A company is considering two projects.
Project A
Project B
Initial investment
$200,000
$200,000
Cash inflow Year 1
$60,000
$90,000
Cash inflow Year 2
$60,000
$90,000
Cash inflow Year 3
$60,000
$40,000
Cash inflow Year 4
$60,000
$50,000
Cash inflow Year 5
$60,000
$70,000
What is the payback period for Project B?
O2 years
2.5 years
O3.5 years
04 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbfabc253-22bf-45ba-8a37-7222e5fcc647%2F1dc45cce-791f-4329-be9c-e3b33c492fee%2Fzwxi9y_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A company is considering two projects.
Project A
Project B
Initial investment
$200,000
$200,000
Cash inflow Year 1
$60,000
$90,000
Cash inflow Year 2
$60,000
$90,000
Cash inflow Year 3
$60,000
$40,000
Cash inflow Year 4
$60,000
$50,000
Cash inflow Year 5
$60,000
$70,000
What is the payback period for Project B?
O2 years
2.5 years
O3.5 years
04 years
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