Quick Flick is considering two investments. Both require a net investment of $120,000 and have the following net cash flows:
Quick uses a combination of the net present value approach and the payback approach to evaluate investment alternatives. The firm uses a discount rate of 14 percent and requires that all projects have a payback period no longer than 3 years. Which investment or investments should Quick accept?
A) only Project X
B) only Project Y
C) both projects X and Y
D) reject both projects

Question

Quick Flick is considering two investments. Both require a net investment of $120,000 and have the following net cash flows: 
Quick uses a combination of the net present value approach and the payback approach to evaluate investment alternatives. The firm uses a discount rate of 14 percent and requires that all projects have a payback period no longer than 3 years. Which investment or investments should Quick accept?
A) only Project X 
B) only Project Y 
C) both projects X and Y 
D) reject both projects

Quizplus · Accepted Answer

Solution:
 11ea10f6_a153_46b1_b6b3_9b69e7fa3ef8_TB2040_00

Quick Flick Is Considering Two Investments