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    Payback Method

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    The manager of Simple Company must choose between two investments. Project A costs $50,000 and promises cash savings of $10,000 a year over a useful life of 10 year. Project B costs $60,000, and the estimated cash savings are $11,000 per year over a useful life of 11 years. Using the payback method, determine which project the manager should choose.

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    Payback method is simply how long it will take to pay back the initial outlay. The payback method does not use any present value in the ...

    Solution Summary

    Solution to calculate payback method and compare different projects.