Porter Co. is analyzing two potential investments. Project XProject YCost of machine$68,000 $60,000 Net cash flow: Year 1 24,000 4,000 Year 2 24,000 26,000 Year 3 24,000 26,000 Year 4 0 20,000 If the company is using the payback period method and it requires a payback of three years or less, which project(s) should be selected?
A. Project Y.
B. Project Y because it has a lower initial investment.
C. Both X and Y are acceptable projects.
D. Neither X nor Y is an acceptable project.
E. Project X.
Answer: E
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