5. Long-term investment decision, payback period method Bill Williams has an opportunity to invest in project A, whose costs are now $ 9,000 and promises annual payments at the end of the year of $ 2,200, $ 2,500 , $ 2,500, $ 2,000, and $ 1,800 for the next 5 years. Bill can also invest $ 9,000 in project B which promises annual end-of-year payments of $ 1,500, $ 1,500, $ 1,500, $ 3,500, and $ 4,000 over the next 5 years.

a) How long will it take Bill to recoup his initial investment in project A?

b) How long will it take Bill to recoup his initial investment in project B?

c) Using the payback period, which project should Bill choose?

d) Do you think there is a problem with this choice?