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Assume a $42,000 investment and the following cash flows for two alternatives: Year Investment A Investment...

Assume a $42,000 investment and the following cash flows for two alternatives:

Year Investment A Investment B
1 $15,000 $22,000
2 10,000 10,000
3 10,000 10,000
4 15,000
5 20,000

Calculate the payback period for investment A and investment B. (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

Payback period
  Investment A years
  Investment B years

Which of the alternatives would you select under the payback method?

  • Investment A

  • Investment B

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