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What are limitations of using the payback method

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Is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $12,000,000 for the year.

Lyssa Berenstein?, staff analyst at Cranes?, is preparing an analysis of the three projects under consideration by Curtis?, the? company's owner.

Because the? company's cash is? limited, Cranes thinks the payback method should be used to choose between the capital budgeting projects.

Question a. What are the benefits and limitations of using the payback method to choose between? projects?

Question b. Calculate the payback period for each of the three projects. Ignore income taxes. Using the payback? method, which projects should Cranes ?choose?

Reference no: EM132567135

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