FIN2000 Capital budgeting
7. Payback method (LO12-3) Assume a $40,000 investment and the following cash flows for
two alternatives.
Investment X Investment Y
Year
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?
12-7. Solution: (show your work please)