In: Finance
Assume a $62,000 investment and the following cash flows for two
alternatives.
Year | Investment X | Investment Y | ||||
1 | $20,000 | $35,000 | ||||
2 | 15,000 | 15,000 | ||||
3 | 15,000 | 22,000 | ||||
4 | 15,000 | — | ||||
5 | 25,000 | — | ||||
a. Calculate the payback for investment X and Y.
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
b. Which alternative would you select under the
payback method? Investment X or Y?