Jigger Ltd is considering two alternative projects; each of which will involve an initial outlay of £600,000. Both will have a four-year life and are expected to yield the following cash inflows:
Which of the following is not true?
A) Project X has a payback period of 3 years.
B) Project Y has a payback period of 2.5 years.
C) Project X will always yield a higher NPV than project Y.
D) Project Y will always yield a higher NPV than project X.

Question

Jigger Ltd is considering two alternative projects; each of which will involve an initial outlay of £600,000. Both will have a four-year life and are expected to yield the following cash inflows:
 Which of the following is not true?
A) Project X has a payback period of 3 years. 
B) Project Y has a payback period of 2.5 years. 
C) Project X will always yield a higher NPV than project Y. 
D) Project Y will always yield a higher NPV than project X.

Quizplus · Accepted Answer

The Answer of Jigger Ltd is considering two alternative projects; each of which will involve an initial outlay of £600,000. Both will have a four-year life and are expected to yield the following cash inflows:
 Which of the following is not true?
A) Project X has a payback period of 3 years. 
B) Project Y has a payback period of 2.5 years. 
C) Project X will always yield a higher NPV than project Y. 
D) Project Y will always yield a higher NPV than project X.

Jigger Ltd Is Considering Two Alternative Projects; Each of Which