Q.9. Coffer Company is analyzing two potential investments.Project X$ 95,400Cost of machineNet cash flow:Year 1Year 2Year 3Year 4Multiple Choiceif the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should be selected?36,00036,00036,0000Neither X nor Y is an acceptable project.Project Y$ 71,000Project Y because it has a lower initial investmentBoth X and Y are acceptable projectsMultiple Choice3,60033,00033,00028,000If the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should beNeither X nor Y is an acceptable project.Project YProject Y because it has a lower initial investment.Project XBoth X and Y are acceptable projects.

Introduction:- Payback period method : It is the time taken for the cash flow of incomes for a…

Year Year 2 33,000 Year 3 33,000 Year 4 28,000 the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should i Multiple Choice 36,000 36,000 0

Year Year 2 33,000 Year 3 33,000 Year 4 28,000 the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should i Multiple Choice 36,000 36,000 0

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Q.9.

Coffer Company is analyzing two potential investments.
Project X
$ 95,400
Cost of machine
Net cash flow:
Year 1
Year 2
Year 3
Year 4
Multiple Choice
if the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should be selected?
36,000
36,000
36,000
0
Neither X nor Y is an acceptable project.
Project Y
$ 71,000
Project Y because it has a lower initial investment
Both X and Y are acceptable projects
Multiple Choice
3,600
33,000
33,000
28,000
If the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should be
Neither X nor Y is an acceptable project.
Project Y
Project Y because it has a lower initial investment.
Project X
Both X and Y are acceptable projects.

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