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    Decision Of Project Based On Cash Inflow

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    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!

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    Solution Summary

    This solution discusses the decision of a project based on cash inflow.