Calculating payback


Old Country Inc. imposes a payback cut off of three years for its international investment projects. If the company has the following two projects available, should they accept either of them?

Year Cash Flow (A) Cash Flow (B)

0 -$50,000 -$70,000

1 35,000 15,000

2 21,000 22,000

3 10,000 31,000

4 5,000 240,000

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Finance Basics: Calculating payback
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