Question: expected rate, the project will break even. The equation is: Payback=Numberofyearspriorto+CashflowduringfillrecoveryyearUnrecoveredcostatstartofyearfullrecovery The a project's payback, the better the project is. However, payback has 3 main

expected rate, the project will break even. The equation is: Payback=Numberofyearspriorto+CashflowduringfillrecoveryyearUnrecoveredcostatstartofyearfullrecovery

expected rate, the project will break even. The equation is: Payback=Numberofyearspriorto+CashflowduringfillrecoveryyearUnrecoveredcostatstartofyearfullrecovery The a project's payback, the better the project is. However, payback has 3 main disadvantages: (1) All dollars received in different years are given given payback and investor wealth maximization. A variant of the regular payback is the discounted payback. Unlike regular payback, the discounted payback considers disregards cash flows the payback year. In addition, there is no specific payback rule to justify project acceptance. Both methods provide information about and risk. Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax casl flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 8%. What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years

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