Question

Porter co. is analyzing two projects for the future. assume that only one project can be selected. project x project y cost of machine $ 68,000 $ 60,000 net cash flow: year 1 24,000 4,000 year 2 24,000 26,000 year 3 24,000 26,000 year 4 0 20,000 the payback period in years for project x is: multiple choice 2.00. 3.83. 3.50. 2.83.

Answer 1

Project x

Year ----- Cash flow ----- Net Invested cash

0 ----------- -68,000

1 24,000 -44,000

2 24,000 -20,000

3 24,000 0

Payback period = 2+ 20,000/24,000 = 2+0.83 = 2.83 years.

The final multiple choice is correct.

Answer 2

Project x
Year ----- Cash flow ----- Net Invested cash
0              -----------           -68,000
1             24,000              -44,000
2             24,000              -20,000
3             24,000                0

Payback period = 2+ 20,000/24,000 = 2+0.83 = 2.83 years.
The final multiple choice is correct.