Consider the following two mutually exclusive projects, each of which require an initial investment of $30,000 and provide cash inflows of $60,000 as shown below. This organization has a 15% cost of capital.
Year Project A Project B
0 ($30,000) ($30,000)
1 $30,000 $10,000
2 $20,000 $20,000
3 $10,000 $30,000
Using the above payback criterion, which is the most desirable project?
Project A, project B, both & A & B are equally acceptable, or neither A or B are acceptable - please advice answer and explain why - thanks!© BrainMass Inc. brainmass.com March 4, 2021, 6:12 pm ad1c9bdddf
This solution discusses the decision of a project based on cash inflow.