Compute the payback period for each project and rank order


Question - Jill Harrington, a manager at Jennings Company, is considering several potential capital investment projects. Data on these projects follow:

Project X Project Y Project Z

Initial investment $40,000 $20,000 $50,000

Annual cash inflows 25,000 10,000 25,400

PV of cash inflows 45,000 33,000 70,000

Required:

1. Compute the payback period for each project and rank order them based on this criterion.

2. Compute the NPV of each project and rank order them based on this criterion.

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Accounting Basics: Compute the payback period for each project and rank order
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