Questions in capital budgeting

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Reference no: EM1312200

Multiple choices in capital budgeting.

Coffer Co. is analyzing two projects for the future.Assume that only one project can be selected.

	Project X	Project Y
Cost of machine	$68,000	60,000
Net cash flow:
Year 1	24,000	4,000
Year 2	24,000	26,000
Year 3	24,000	26,000
Year 4	0	20,000

If the company is using the payback period method and it requires a payback of three years or less, which project should be selected?

A. Project X.
B. Neither X nor Y is an acceptable project.
C. Both X and Y are acceptable projects.
D. Project Y.
E. Project Y because it has a lower initial investment.

Reference no: EM1312200

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