Question: expected rate, the project will break even. The equation is: PaybackyearnpriortofullrecoveryNumberof The a project's payback, the better the project is. Howevec, nayback has a main

The a project's payback, the better the project is. Howevec, nayback has

expected rate, the project will break even. The equation is: PaybackyearnpriortofullrecoveryNumberof The a project's payback, the better the project is. Howevec, nayback has a main disadvantagest (1) Ail dollars motived in difterent years are oven (2) Cash fows beyond the payback year are ignored. (3) the payback marety indicates when a projects investment will be recovered. There is ne necessary relaticmsid between I given poyback and investor weath maximization. A variant of the regular payback is the discounted payback, Unike regular paybsck, the discounted payback considers costs. However, the dachunted peytack still disregards cash flows the payback year. In addition, there is no specific payback rule to justify project acceprance. foth methods provide information abouit. and risk. Quantitative Problemt Eellinger Industries is considering two projects for inclusion in its capatai budget, and you have been asked to do the analysis. Both projects' afler-tax ch flows are shown on the time tine below. Depreciation, salvage values, net operating working captal requirements, and tax effects are all inciuded in these cash flows. both proje have 4-year lives, and they have risk characterstics similer to the firm's average project. flellinger's WACC is B%. 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. have 4-vear lives, and they have risk charocteristics similar to the firm's average project. Bellinger's wacc is bw. What is Project A's paybsck? Do not round intermedate calculations, Round your answer to four decimal places. years What is Project A's discounted payback? Do not round intermediate calculatioes. Round your answer to four decimal places. years What is Project B's paybsck? Do not round intermediate calculations. Round your answer to four decimbl places: years What is Project B's. discounted payback? Do not round intermediate calculations; pound your answer to four becimal places. years

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