Solved: Alternatives under the payback method, Finance Basics

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Alternatives under the payback method

Problem:

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? Why?

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Finance Basics: Alternatives under the payback method

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