calculate each​ project's payback period.

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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Elysian​ Fields, Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusive projects. Project Hydrogen requires an initial outlay of $28,000​; project Helium requires an initial outlay of ​$34,000.

Using the expected cash inflows given for each project in the following​ table,

 
 
Expected cash inflows
Year
 
Hydrogen
 
Helium
1
 
​$6,500
 
​$8,000
2
 
​$5,000
 
​$8,000
3
 
​$8,500
 
​$7,000
4
 
​$3,000
 
​$4,500
5
 
​$3,500
 
​$5,000
6
 
​$2,500
 
​$4,000

calculate each​ project's payback period.

Which project meets​ Elysian's standards?

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