Question: A company is considering two short-term projects: Month A B 0 -$1,200 -$1800 1 $0 $ 400 2 $200 $ 400 3 $300 $ 300

A company is considering two short-term projects:

Month A B

0 -$1,200 -$1800

1 $0 $ 400

2 $200 $ 400

3 $300 $ 300

4 $400 $ 500

5 $500 $ 200

6 $600 $ 100

a. Based on the undiscounted payback period, which project is preferred?

b. Calculate the benefit-cost ratio for each alternative (use excel)

c. Based on the benefit-cost ratio analysis method, which project is preferred?

(Show and explain your solution)

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