Assume a company is going to make an investment of $460,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Option A, Product A Option B, Product B $195,000 $145,000 185,000 175,000 65,000 65,000 25,000 85,000 A. Calculate the payback period of each product. Round your answers to 2 decimal places. Option A, Product A fill in the blank 1 years Option B, Product B fill in the blank 2 years B. Which of the two options would you choose based on the payback method?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Assume a company is going to make an investment of $460,000 in a machine and the following are the cash flows that two different products would bring in years one through four.

Option A, Product A Option B, Product B
$195,000 $145,000
185,000 175,000
65,000 65,000
25,000 85,000

A. Calculate the payback period of each product. Round your answers to 2 decimal places.

Option A, Product A fill in the blank 1 years
Option B, Product B fill in the blank 2 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 $460,000 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
$195,000
$145,000
185,000
175,000
65,000
65,000
25,000
85,000
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?
Transcribed Image Text:Assume a company is going to make an investment of $460,000 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 $195,000 $145,000 185,000 175,000 65,000 65,000 25,000 85,000 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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