• Expert Inc. is considering undertaking two mutually exclusive projects: 
• Project A and Project B. 
• Year Cash flow — Project A Cash flow — Project B 
• 0 $(120,000) $(120,000) 
• 1 40,000 80,000 
• 2 50,000 70,000 
• 3 60,000 60,000 
• 4 70,000 50,000 
• 5 80,000 40,000 
• Expert Inc.’s rate of return is 10%. 
• 
  
• Required: 
• a) Calculate the payback period for each project.
•  
• b) Describe the advantages and disadvantages of using the payback period method to evaluate the projects.