2. Choosing between two projects with acceptable payback periodsShell Camping Gear, Inc., is considering two mutually exclusive projects. Each requires an initial investment of

$100,000.

John Shell, president of the company, has set a maximum payback period of 4 years.The cash inflows associated with each project are shown in the following table:

.

a.Determine the payback period of each project.

b.Which project is acceptable based on payback period?

		Cash inflows (CFt)
Year		Project A		Project B
1		$10,000		$40,000
2		$20,000		$30,000
3		$30,000		$20,000
4		$40,000		$10,000
5		$20,000		$20,000

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