Question: Can you please explain how they calculated the payback period? Offshore Drilling Products, Inc. imposes a payback cutoff of 3 years for its international investment

Can you please explain how they calculated the payback period? Offshore DrillingProducts, Inc. imposes a payback cutoff of 3 years for its internationalCan you please explain how they calculated the payback period?

Offshore Drilling Products, Inc. imposes a payback cutoff of 3 years for its international investment projects. If the company has the following two projects available, should they accept either of them? Year Cash Flows A Cash Flows B $30,000 15,000 10,000 10,000 5,000 -$45,000 5,000 10,000 20,000 250,000 1 2 4 Project A Payback period2+ ($30,000 - 25,000)/10,000 2.50 years Project B: Payback period 3+ ($45,000 - 35,000) /$250,000 -3.04 years

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