Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$261,339 –$15,269 1 25,300 4,848 2 52,000...

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Finance

Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 –$261,339        –$15,269
1 25,300        4,848
2 52,000        8,223
3 54,000        13,542
4 406,000        9,270

Whichever project you choose, if any, you require a 6 percentreturn on your investment.
Required:
(a) What is the payback period for Project A?

(b) What is the payback period for Project B?

(c) What is the discounted payback period for Project A?

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a Project A Year Cash flow stream Cumulative cash flow 0 261339 261339 1 25300 236039 2 52000 184039 3 54000 130039 4 406000 275961 Payback period is the time by which undiscounted cashflow cover the intial investment outlay this is happening between year 3 and 4 See Answer

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Consider the following two mutually exclusive projects: YearCash Flow (A)Cash Flow (B)0–$261,339 –$15,269 125,300 4,848 252,000 8,223 354,000 13,542 4406,000 9,270 Whichever project you choose, if any, you require a 6 percentreturn on your investment.Required:(a)What is the payback period for Project A? (b)What is the payback period for Project B?(c)What is the discounted payback period for Project A?

Year	Cash Flow (A)	Cash Flow (B)
0	–$261,339	–$15,269
1	25,300	4,848
2	52,000	8,223
3	54,000	13,542
4	406,000	9,270