Question: Becker Inc. uses discounted payback period for projects under $25,000 and has a cut off period of 4 years for these small value projects. Two

Becker Inc. uses discounted payback period for projects under $25,000 and has a cut off period of 4 years for these small value projects. Two projects, R and S, are under consideration. The anticipated cash flows for these two projects are listed below. If Becker Incorporated uses an 8% discount rate on these projects, are they accepted or rejected? If it uses 12% discount rate? A 16% discount rate? Why is it necessary to only look at the first four years of the projects€™ cashflows?

Cash Flow Initial cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Project R $24,000 6,000 $ 8,000 $10,000 $12,000 Project S $18,000 $9,000 6,000 6,000 3,000

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