Capital Budgeting: PAYBACK Given: Project A &
Capital Budgeting:
PAYBACK
Given: Project A Project B
Initial Investment $200,000 $300,000
Cash Flows:
1 $50,000 $100,000
2 $50,000 $100,000
3 $50,000 $100,000
4 $50,000 $50,000
5 $37394 $45,778
a. What is ‘Payback’ for each project?
b. Choose ‘Payback’ ‘winner’.
c. Cite advantage/disadvantage associated with ‘Payback’.
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