Assume a $290,000 investment and the following cash flows for two products: Year Product X Product Y 1 2 3 4 $ 100,000 100,000 75,000 40,000 $ 90,000 100,000 80,000 40,000 a. Calculate the payback for products X and Y. Note: Do not round intermediate calculations. Round your answers to 2 decimal place Product X Product Y years years b. Which alternative would you select under the payback method? Product X is selected O Product Y is selected

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Assume a $290,000 investment and the following cash flows for two products:
Year Product X
1
A234
4
$ 100,000
100,000
75,000
40,000
Product Y
$ 90,000
100,000
Product X
Product Y
80,000
40,000
a. Calculate the payback for products X and Y.
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
years
years
b. Which alternative would you select under the payback method?
Product X is selected
O Product Y is selected
Transcribed Image Text:Assume a $290,000 investment and the following cash flows for two products: Year Product X 1 A234 4 $ 100,000 100,000 75,000 40,000 Product Y $ 90,000 100,000 Product X Product Y 80,000 40,000 a. Calculate the payback for products X and Y. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. years years b. Which alternative would you select under the payback method? Product X is selected O Product Y is selected
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