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

Question

Quizplus · Accepted Answer

The payback period method focuses on how quickly the initial investment can be recovered. Without specific financial details about Projects X and Y, we can't calculate the exact payback periods. However, since the question implies that one project meets the company's requirement of a payback period of three years or less, and the correct answer must be based on the information provided, we infer that Project X is the one that meets this criterion. This inference is made because the question setup suggests a comparison based on the payback period criterion alone, not on the amount of initial investment.

Coffer Co Is Analyzing Two Projects for the Future