Capital Budgeding

Problem: Your division is considering two investment projects, each requires an upfront expenditure of $20 million. You assume also that the investments will produce the following after tax cash flows in million of dollars) Year 2 3 4 Project A 9 10 10 14 Project B 15 9 6 8 a/What is the discounted payback period for each of the projects if the cost of capital is 13%? b/Which project is better? Question: What are the problems with the normal payback period