The paybak criterion and which is the most desirable project

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Consider the following two mutually exculsive projects, each of which need an initial investment of $30,000 and provide cash inflows of $60,000 as shown below. This organization has a 15% cost of capital.

Year Project A Project B
0 ($30,000) ($30,000)
1 $30,000 $10,000
2 $20,000 $20,000
3 $10,000 $30,000

Using the above paybak criterion, which is the most desirable project?

project A, project B, both & A & B are equally acceptable, or niether A or B are acceptable - please advice answer and explain why - thanks!!

Reference no: EM1345662

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