Boston Corp.is evaluating three projects.Each project will return a total of $600,000 to the company in cash flows over a three-year period.The cash flows for the three projects are as follows: Using the payback period method,which project represents the best investment for Boston?

Question

Boston Corp.is evaluating three projects.Each project will return a total of $600,000 to the company in cash flows over a three-year period.The cash flows for the three projects are as follows:  Using the payback period method,which project represents the best investment for Boston?

Quizplus · Accepted Answer

Based on the payback period method, Project A has the shortest payback period of 2 years. Project B has a payback period of 2.5 years, and Project C has a payback period of 3 years. Therefore, Project A represents the best investment for Boston as it has the shortest payback period and will return the initial investment in the shortest amount of time.