Buy Coastal, Inc., imposes a payback cutoff of 2 years for its international inv

Question

Buy Coastal, Inc., imposes a payback cutoff of 2 years for its international investment projects. Suppose the company has the following two projects available. Project A has payback period of years, while project B has a payback period of years. Therefore, it should accept  project A and reject  project B. (Round your answers to 3 decimal places. (e.g., 32.162))

Year Cash Flow (A) Cash Flow (B)   0 ?$40,000         ?$68,000           1 22,000         11,000           2 30,000         19,000           3 14,000         29,000           4 5,000         271,000        

Explanation / Answer

Project A payback = 1.600 years

Project B payback = 3.033 years

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