Cortes Cargo,Inc.is considering three investment opportunities with the following payback periods: $$\begin{array} { | l | c | c | c | }
\hline & \text { Project } X & \text { Project } Y & \text { Project } Z \
\hline \text { Payback period } & 3 \text { years } & 2.5 \text { years } & 2.8 \text { years } \
\hline
\end{array}$$ Use the decision rule for payback to rank the projects from most desirable to least desirable,all else being equal.

Question

Cortes Cargo,Inc.is considering three investment opportunities with the following payback periods: $$\begin{array} { | l | c | c | c | } 
\hline & \text { Project } X & \text { Project } Y & \text { Project } Z \
\hline \text { Payback period } & 3 \text { years } & 2.5 \text { years } & 2.8 \text { years } \
\hline
\end{array}$$ Use the decision rule for payback to rank the projects from most desirable to least desirable,all else being equal.

Quizplus · Accepted Answer

The decision rule for payback period is to prefer projects with shorter payback periods. Therefore, Project Y (2.5 years) is most desirable, followed by Project Z (2.8 years), and then Project X (3 years).

Cortes Cargo,Inc Use the Decision Rule for Payback to Rank the Projects