Each of the following investment opportunities would cost $55,000. Using the following information, calculate the payback period for each proposed investment. In addition, which project would you select based on the payback method of analysis? Why? Finally, what short comings do you see with the payback method of analysis?
Project
A Project B Project
1 $5,000 $25,000
2 5,000 17,000
3 10,000 17,000
4 15,000 0
5 15,000 0
6 25,000 0