Discounted payback periods for projects Y and Z are
Below are the expected after-tax cash flows for Projects Y and Z. Both projects have an initial cash outlay of $20,000 and a required rate of return of 17%.
Project Y Project Z
Year 1 $12,000 $10,000
Year 2 $8,000 $10,000
Year 3 $6,000 0
Year 4 $2,000 0
Year 5 $2,000 0
A) 1.64 and 1.71 years.
B) 3.14 years and never.
C) 2 years and 2 years.
D) 5 years and never.
Answer: B
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