If the firm utilized a payback cutoff standard of three years which, if either, of the investments would be acceptable? Why?

Fin – recycle paper company

The investment in automated equipment would be acceptable because it has a payback period of 2.5 years, which is less than the 3 year cutoff. The investment in a computerized inventory system would not be acceptable because it has a payback period of 4 years, which is greater than the 3 year cutoff.