Question: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $201,178 $15,104 1 25,700 4,731 2 55,000 8,951 3 56,000

Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 $201,178 $15,104
1 25,700 4,731
2 55,000 8,951
3 56,000 13,135
4 413,000 8,126

Whichever project you choose, if any, you require a 6 percent return on your investment.

a. What is the payback period for Project A?

b. What is the payback period for Project B?

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