Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) 01234 -$ 52,000 20,500 27,200 22,500 8,500 Cash Flow (B) -$ 97,000 22,500 27,500 31,500 243,000 a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Which, if either, of the projects should the company accept? a. Project A Project B b. Project acceptance years years

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the
following two projects available.
Year Cash Flow (A)
01234
-$ 52,000
20,500
27,200
22,500
8,500
Cash Flow (B)
-$ 97,000
22,500
27,500
31,500
243,000
a. What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. Which, if either, of the projects should the company accept?
a. Project A
Project B
b. Project acceptance
years
years
Transcribed Image Text:Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow (A) 01234 -$ 52,000 20,500 27,200 22,500 8,500 Cash Flow (B) -$ 97,000 22,500 27,500 31,500 243,000 a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Which, if either, of the projects should the company accept? a. Project A Project B b. Project acceptance years years
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