Assume a company is going to make an investment of $440,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Option A, Option B, Product A Product B $190,000 $155,000 190,000 175,000 55,000 60,000 15,000 60,000 A. Calculate the payback period of each product. Round your answers to 2 decimal places. Option A, Product A years Option B, Product B years B. Which of the two options would you choose based on the payback method?
Assume a company is going to make an investment of $440,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Option A, Option B, Product A Product B $190,000 $155,000 190,000 175,000 55,000 60,000 15,000 60,000 A. Calculate the payback period of each product. Round your answers to 2 decimal places. Option A, Product A years Option B, Product B years B. Which of the two options would you choose based on the payback method?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 4EA: Assume a company is going to make an investment of $450,000 in a machine and the following are the...
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![Assume a company is going to make an investment of
$440,000 in a machine and the following are the cash flows
that two different products would bring in years one
through four.
Option A,
Option B,
Product A
Product B
$190,000
$155,000
190,000
175,000
55,000
60,000
15,000
60,000
A. Calculate the payback period of each product. Round
your answers to 2 decimal places.
Option A, Product A
years
Option B, Product B
years
B. Which of the two options would you choose based on the
payback method?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3fcc1f85-d6be-4b54-bb4f-0a2aff45016b%2F138e205a-4ced-4bbd-913d-9a84e93c37c1%2Fir8pypk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume a company is going to make an investment of
$440,000 in a machine and the following are the cash flows
that two different products would bring in years one
through four.
Option A,
Option B,
Product A
Product B
$190,000
$155,000
190,000
175,000
55,000
60,000
15,000
60,000
A. Calculate the payback period of each product. Round
your answers to 2 decimal places.
Option A, Product A
years
Option B, Product B
years
B. Which of the two options would you choose based on the
payback method?
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