Buy Coastal, Inc., imposes a payback cutoff of three years for its international investment projects.
| Year |
Cash Flow (A) |
|
Cash Flow (B) |
| 0 |
'$ |
60,000 |
|
|
'$ |
70,000 |
|
| 1 |
|
23,000 |
|
|
|
15,000 |
|
| 2 |
|
28,000 |
|
|
|
18,000 |
|
| 3 |
|
21,000 |
|
|
|
26,000 |
|
| 4 |
|
8,000 |
|
|
|
230,000 |
|
|
What is the payback period for both projects?
|
Payback period |
| Project A |
years |
| Project B |
years |
|
Which project should the company accept?