Coffer CoIs Analyzing Two Projects for the Future If the Company Is Using the Payback Period Method and One

question 144

Multiple Choice

Coffer Co.is analyzing two projects for the future.Assume that only one project can be selected.

$\begin{array} { l r r }&\underline{\text{Project X}}&\underline{\text{Project Y}}\\\text{Cost of machine} & \$ 68,000 & \$ 60,000 \\\text{Net cash flow:} & & \\\text{Year 1} & 24,000 & 4,000 \\\text{Year 2} & 24,000 & 26,000 \\\text{Year 3} & 24,000 & 26,000 \\\text{Year 4} & 0 & 20,000\end{array}$


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:

Economic Markets

Systems or environments within which parties engage in exchange of goods, services, or information.

Business Flexibility

The ability of a company to adapt quickly and efficiently to changes in its external environment, including market demands, technology, and regulatory shifts.

Taylorism

A theory of management that analyzes and synthesizes workflows, aiming to improve economic efficiency, especially labor productivity, also known as scientific management.

Cross-Training

The practice of training employees to perform multiple roles or to undertake tasks outside their traditional responsibilities.