Table 10.1 shows the cash flows and discounted cash flows for three mutually exclusive projects available to a company.Assume an interest rate of 5%.Which project has the shortest payback period?
A) Project A
B) Project B
C) Project C
D) It cannot be determined from the information given.

Question

Table 10.1 shows the cash flows and discounted cash flows for three mutually exclusive projects available to a company.Assume an interest rate of 5%.Which project has the shortest payback period? 
A) Project A 
B) Project B 
C) Project C 
D) It cannot be determined from the information given.

Quizplus · Accepted Answer

Project A has the shortest payback period of 2 years. Projects B and C have longer payback periods of 3 years and 4 years, respectively. Therefore, Project A would be the best choice if the company is looking for a project that provides a quick return on investment. However, other factors such as the size of the cash flows, the risk involved, and the company's overall strategy should also be considered before making a final decision.

Table 101 Shows the Cash Flows and Discounted Cash Flows for for Three