Here are the expected cash flows for three projects: a. What is the payback period on each

Question:

Here are the expected cash flows for three projects:

a. What is the payback period on each of the projects?
b. Given that you wish to use the payback rule with a cutoff period of 2 years, which projects would you accept?
c. If you use a cutoff period of 3 years, which projects would you accept?
d. If the opportunity cost of capital is 10%, which projects have positive NPVs?
e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...