Coffer Co Is Analyzing Two Projects for the Future If the Company Is Using the Payback Period Method and That

question 109

Multiple Choice

Coffer Co. is analyzing two projects for the future. Assume that only one project can be selected. $$\begin{array} { | l | c | r | } \hline & \text { Project X } & \text { Project Y } \\\hline \text { Cost of machine } & \$ 77,000 & \$ 55,000 \\\hline \text { Net cash flow: } & & \\\hline \text { Year 1 } & 28,000 & 2,000 \\\hline \text { Year 2 } & 28,000 & 25,000 \\\hline \text { Year 3 } & 28,000 & 25,000 \\\hline \text { Year 4 } & 0 & 20,000 \\\hline\end{array}$$ If the company is using the payback period method and it requires a payback of three years or less, which project should be selected?

• A) Project Y.
• B) Project X.
• C) Both X and Y are acceptable projects.
• D) Neither X nor Y is an acceptable project.
• E) Project Y because it has a lower initial investment.

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Definitions:

Ovule

The structure in seed plants that develops into a seed after fertilization.

Egg Cell

The female reproductive cell or gamete in many multicellular organisms, involved in sexual reproduction.

Petals

The often brightly colored parts of a flower, typically surrounding the reproductive organs, and serving to attract pollinators.

Pollinators

Animals that facilitate the transfer of pollen from the male structures of flowers to the female structures, enabling plants to reproduce.