Buy Coastal, Inc., imposes a payback cutoff of three years for its international investment projects.
|
Year
|
Cash Flow (A)
|
|
Cash Flow (B)
|
|
0
|
$
|
64,000
|
|
|
$
|
74,000
|
|
|
1
|
|
25,000
|
|
|
|
17,000
|
|
|
2
|
|
32,000
|
|
|
|
20,000
|
|
|
3
|
|
23,000
|
|
|
|
30,000
|
|
|
4
|
|
10,000
|
|
|
|
234,000
|
|
What is the payback period for both projects?
|
Payback period
|
|
Project A
|
years
|
|
Project B
|
years
|
Which project should the company accept?
An investment project has annual cash inflows of $3,600, $4,500, $5,700, and $4,900, and a discount rate of 15 percent.
What is the discounted payback period for these cash flows if the initial cost is $6,300?
What is the discounted payback period for these cash flows if the initial cost is $8,400?
What is the discounted payback period for these cash flows if the initial cost is $11,400?