Gator Lover's Ice Cream is a small ice cream manufacturer. They want to either open a new store (Project A) or buy a new machine to mass produce ice cream to sell to supermarkets (Project B). Calculate the payback period for both products. Then in 3-5 sentences discuss which project the Ice Cream store should go with and why.
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Project A
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Project B
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Initial Investment
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($48,000)
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($52,000)
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Year
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Operating Cash Inflows (after-tax)
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1
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$15,000
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$18,000
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2
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$15,000
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$20,000
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3
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$15,000
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$15,000
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4
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$15,000
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$12,000
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5
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$15,000
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$10,000
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Total Years 1-5
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$75,000
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$75,000
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