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 after-tax cash inflows associated with each project are shown in the following table:

Table: year 1 project A 10,000 project B 40,000 ------ year 2 project A 20,000 project B 30,000 ------ year 3 project A 30,000 project B 20,000 ------ year 4 project A 40,000 project B 10,000 ------ year 5 project A 30,000 project B 30,000

a.Determine the payback period of each project.

b.Because they are mutually exclusive, Shell must choose one. Which should the company invest in?