Taya and Herman are partners in a business. They have approached each other regarding possible investments to aid their business in creating more revenue. Taya's investment would require an initial outlay of cash of $40,000 but would provide an additional revenue stream of $22,000 per year. Herman's investment would cost $55,000 and would bring in additional revenue of $28,000 per year. Both investments would provide revenue for four years. Using a discount rate of 10%, calculate the discounted payback period for each investment and determine which investment would better use the company's resources. (Round intermediary calculations to the nearest whole dollar and the final payback period to the nearest hundredth. Ignore taxes.)

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The Answer of Taya and Herman are partners in a business. They have approached each other regarding possible investments to aid their business in creating more revenue. Taya's investment would require an initial outlay of cash of $40,000 but would provide an additional revenue stream of $22,000 per year. Herman's investment would cost $55,000 and would bring in additional revenue of $28,000 per year. Both investments would provide revenue for four years. Using a discount rate of 10%, calculate the discounted payback period for each investment and determine which investment would better use the company's resources. (Round intermediary calculations to the nearest whole dollar and the final payback period to the nearest hundredth. Ignore taxes.)

Taya and Herman Are Partners in a Business