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faust18 [17]
3 years ago
15

Samuelson Electronics has a required payback period of three years for all of its projects. Currently, the firm is analyzing two

independent projects. Project A has an expected payback period of 2.9 years and a net present value of $4,200. Project B has an expected payback period of 3.1 years with a net present value of $26,400. Which project(s) should be accepted based on the payback decision rule?
Business
1 answer:
sweet-ann [11.9K]3 years ago
3 0

Answer:

Samuelson Electronics should accept Project A because according to the payback decision rule, the project with the shortest payback period should always be chosen over the project with the longer payback period, since a longer payback period means more risk.

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