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

Question

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

Quizplus · Accepted Answer

The payback period decision rule states that the project with the shortest payback period is the most desirable. Therefore, Project Y (2.5 years) is the most desirable, followed by Project Z (2.8 years), and then Project X (3 years).

Cortes Company Is Considering Three Investment Opportunities with the Following