Assume a $70,000 investment and the following cash flows for two alternatives. Year Investment X Investment Y 1 $15,000 $35,000 2 20,000 20,000 3 20,000 20,000 4 20,000 — 5 15,000 — a. Calculate the...

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Finance

Assume a $70,000 investment and the following cash flows for twoalternatives.
Year Investment X Investment Y
1 $15,000 $35,000
2 20,000 20,000
3 20,000 20,000
4 20,000 —
5 15,000 —

a. Calculate the payback for investment X and Y.(Do not round intermediate calculations. Round your answersto 2 decimal places.)

b. Which alternative would you select under thepayback method?

Investment X
Investment Y

Answer & Explanation Solved by verified expert

3.6 Ratings (327 Votes)

Investment X Year 0 1 2 3 4 5 Cashflowin 70000 15000 20000 20000 20000 15000 Cumulative Cashflowin 70000 55000 35000 15000 5000 20000 Payback Period See Answer

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Assume a $70,000 investment and the following cash flows for twoalternatives.YearInvestment XInvestment Y1$15,000$35,000220,00020,000320,00020,000420,000—515,000—a. Calculate the payback for investment X and Y.(Do not round intermediate calculations. Round your answersto 2 decimal places.) b. Which alternative would you select under thepayback method? Investment XInvestment Y

Year	Investment X		Investment Y
1		$15,000		$35,000
2		20,000		20,000
3		20,000		20,000
4		20,000		—
5		15,000		—