Question: 1. Consider the cash flows for the 3 projects as shown below. a. What is the payback period on each of the above projects? b.

1.Consider the cash flows for the 3 projects as shown below.1.Consider the cash flows for the 3 projects as shown below. a.What

a.What is the payback period on each of the above projects?

b.Given that you wish to use the payback rule with a cutoff period of two years, which projects would you accept?

c.If you use a cutoff period of three years, which projects would you accept?

d.If the opportunity cost of capital is 10%, which projects have positive NPVs?

Cash Flows ($) Project C1 Ca -5,000+1,000 1,000 3,000 -1,000 -5,000 +1,000 1,000 3,000 +5,000 0 1,000 +2,000 +3,000

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