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Rank the two projects using the payback period method

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Reference no: EM132681853

Question - A firm is considering two alternative projects with the following cash flows:

 

Project A

Project B

Year 1

$20,000

$10,000

Year 2

$20,000

$20,000

Year 3

$20,000

$30,000

Year 4

$20,000

$15,000

Each project requires an investment of $60,000. Rank the two projects using the payback period method.

a. Cannot be determined from the data provided.

b. Project A and B are equal.

c. Project A is better.

d. Project B is better.

Reference no: EM132681853

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