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Assume a $250,000 investment and the cash flows for the two products listed below. a. Cal

Assume a $250,000 investment and the cash flows for the two products listed below. a. Cal

Assume a $250,000 investment and the cash flows for the two products listed below.

a. Calculate the payback for products X and Y. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. Which alternative would you select under the payback method?
  Investment amount $250,000    
  Cash flows: Product X Product Y  
  Year 1 $90,000 $50,000  
  Year 2 90,000 80,000  
  Year 3 60,000 60,000  
  Year 4 20,000 70,000  
         
  Enter answers in the highlighted areas below.      
         
  Solutions:      
         
a. Calculate the payback for products X and Y. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
         
  Product X:      
    Cash flows Amount yet to be Recovered  
  Initial investment      
  Year 1      
  Year 2      
  Year 3      
  Year 4      
         
         
  Payback period X   years  
         
  Product Y:      
    Cash flows Amount yet to be Recovered  
  Initial investment      
  Year 1      
  Year 2      
  Year 3      
  Year 4      
         
  Payback period Y   years  
         
b. Which alternative would you select under the payback method?
Abhinav 02-Dec-2019

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