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Determine which project should lz company accept

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Point 1: LZ Company ranks projects on the basis of payback. LZ Company only accepts projects with a payback period of less than 3 years. Project A has an investment of $10,000 and generates incremental cash flows of $5,000 a year for 10 years. Project B has an investment of $20,000 and generates incremental cash flows of $8,000 per year for 8 years. Project C has an investment of $30,000 and generates cash flows of $9,000 per year for 6 years.

Question 1: Assuming LZ Company has $30,000 of capital available and the projects are independent, which project(s) should LZ Company accept?

Reference no: EM132503568

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