The conventional payback criterion

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You are considering two investment options. In option A, you have to invest $5,000 now and $1,000 three years from now. In option B, you have to invest $3,500 now, $1,500 a year from now and $1,000 three years from now. In both options, you receive four annual payments of $2,000 each. (You will get the rst payment a year from now.) Which of these options would you choose based on?

1. The conventional payback criterion

2. The present worth criterion assuming 10% interest?

Reference no: EM13801158

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