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Question
Quick Flick is considering two investments. Both require a net investment of $120,000 and have the following net cash flows:| Year | Project X | Project Y |
| 1 | $50,000 | $25,000 |
| 2 | 40,000 | 45,000 |
| 3 | 30,000 | 50,000 |
| 4 | 25,000 | 60,000 |
| 5 | 20,000 | 70,000 |
Quick uses a combination of the net present value approach and the payback approach to evaluate investment alternatives. The firm uses a discount rate of 14 percent and requires that all projects have a payback period no longer than 3 years. Which investment or investments should Quick accept?
a. only Project X
b. only Project Y
c. both projects X and Y
d. reject both projects
Answer
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Related questions
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Q:
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