Two new software projects are proposed to a young, start-up company. The Alpha project will cost $320,000 to develop and is expected to have annual net cash flow of $40,000. The Beta project will cost $115,000 to develop and is expected to have annual net cash flow of $11,000. The company is very concerned about their cash flow.Calculate the payback period for each project. Which project is better from a cash flow standpoint. (Round your answers to 2 decimal places.)Payback period for project Alpha8 yearsPayback period for project Beta10.45 years
Two new software projects are proposed to a young, start-up company. The Alpha project will cost $320,000 to develop and is expected to have annual net cash flow of $40,000. The Beta project will cost $115,000 to develop and is expected to have annual net cash flow of $11,000. The company is very concerned about their cash flow.Calculate the payback period for each project. Which project is better from a cash flow standpoint. (Round your answers to 2 decimal places.)Payback period for project Alpha8 yearsPayback period for project Beta10.45 years
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
Problem 1PS
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Two new software projects are proposed to a young, start-up company. The Alpha project will cost $320,000 to develop and is expected to have annual net cash flow of $40,000. The Beta project will cost $115,000 to develop and is expected to have annual net cash flow of $11,000. The company is very concerned about their cash flow.
Calculate the payback period for each project. Which project is better from a cash flow standpoint. (Round your answers to 2 decimal places.)
Payback period for project Alpha
8 years
Payback period for project Beta
10.45 years
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