8. The simplest and arguably the most commonly used method of investment appraisal is a technique known as payback. The

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8 The Simplest And Arguably The Most Commonly Used Method Of Investment Appraisal Is A Technique Known As Payback The 1 (56.6 KiB) Viewed 64 times

8. The simplest and arguably the most commonly used method of investment appraisal is a technique known as payback. The following table represents the cash flows from two potential projects. Each project requires an initial investment of £100,000 and delivers a cash benefit over the following five years only. Year Project A (£) Project B (£) 0 (today) 1 (100,000) 50,000 40,000 (100,000) 20,000 30,000 2 3 30,000 20,000 4 5 20,000 60,000 30,000 40,000 50,000 70,000 4 years Total Payback 3 years Which project would you invest in and why?