Ginny is considering an investment costing $55,000 that has cash flows of $35,000 inYear 2, $36,000 in Year 3, and $5,000 in Year 4.

Ginny is considering an investment costing $55,000 that has cash flows of $35,000 inYear 2, $36,000 in Year 3, and −$5,000 in Year 4. Ginny requires a rate of return of 8percent and has a required payback period of three years. Based on the paybackmethod should she make this investment? All things considered, do you agree withthis decision? Why or why not?

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