Assume a $40,000 investment and the following cash flows for two alternatives.
Year Investment X Investment Y
1 $6,000 $15,000
2 $8,000 $20,000
3 $9,000 $10,000
4 $17,000 -
5 $20,000 -
Which of the alternatives would you select under the payback method?© BrainMass Inc. brainmass.com March 4, 2021, 9:05 pm ad1c9bdddf
Under the payback method we select all alternatives which have a payback period less than the cut off payback period. In case the cut off period is now known, we ...
The solution explains the acceptance/rejection decision using payback method