Assume a $40,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1 $10,00 10,000 2 10,000 20,000 3 15,000 25,000 4 10,000 - 5 20,000 - a. Calculate the payback for investments A and B. (Round your answers to 2 decimal places.) b. Which investment would you select under the payback method? multiple choice 1 Investment A Investment B c. If the inflow in the fifth year for Investment A was $20,000,000 instead of $20,000, would your answer change under the payback method? multiple choice 2 Yes No
Assume a $40,000 investment and the following cash flows for two alternatives. Year Investment A Investment B 1 $10,00 10,000 2 10,000 20,000 3 15,000 25,000 4 10,000 - 5 20,000 - a. Calculate the payback for investments A and B. (Round your answers to 2 decimal places.) b. Which investment would you select under the payback method? multiple choice 1 Investment A Investment B c. If the inflow in the fifth year for Investment A was $20,000,000 instead of $20,000, would your answer change under the payback method? multiple choice 2 Yes No
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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Question
Assume a $40,000 investment and the following cash flows for two alternatives.
Year Investment A Investment B
1 $10,00 10,000
2 10,000 20,000
3 15,000 25,000
4 10,000 -
5 20,000 -
a. Calculate the payback for investments A and B. (Round your answers to 2 decimal places.)
b. Which investment would you select under the payback method?
multiple choice 1
- Investment A
- Investment B
c. If the inflow in the fifth year for Investment A was $20,000,000 instead of $20,000, would your answer change under the payback method?
multiple choice 2
- Yes
- No
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