Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10% and an inflation rate of 4%. Compute the (non-discount) payback in years and the net present value for both projects and offer advice as to the best course of action.

Year. A B

0. -$100,000 -$400,000

1 $60,000 $100,000

2. 20,000 60,000

3 60,000 140,000

4 80,000 200,000

5 600,000 800,000