A Company Produces Two Boat Models,Montauk and Orient Required:
Use the Payback Period to Evaluate These Two Investment

question 80

Essay

A company produces two boat models,Montauk and Orient.Both products are being considered for major investment projects next year.Relevant data follow:
$$\begin{array}{lrr}&\underline{\text{Montauk }}&\underline{\text{Orient }}\\\text{New investment}&\$ 424,000&\$ 380,000\\\text{Expected 3-year net cash flows:}\\\text{Year 1}&150,000&130,000\\\text{Year 2}&160,000&130,000\\\text{Year 3}&170,000&130,000\end{array}$$
Required:
Use the payback period to evaluate these two investment projects.

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