Long-term investment decision, payback method Personal Finance Problem Bill Williams has the opportunity to invest in project A that costs $8,200 today and promises to pay $2,200, $2,600, $2,600, $2,100 and $1,800 over the next 5 years. Or, Bill can invest $8,200 in project B that promises to pay $1,400, $1,400, $1,400, $3,700 and $4,100 over the next 5 years. (Hint: For mixed stream cash inflows, calculate cumulative cash inflows on a year-to-year basis until the initial investment is recovered.) a. How long will it take for Bill to recoup his initial investment in project A? b. How long will it take for Bill to recoup his initial investment in project B? c. Using the payback period, which project should Bill choose? d. Do you see any problems with his choice? NPV Simes Innovations, Inc., is negotiating to purchase exclusive rights to manufacture and market a solar-powered toy car. The car's inventor has offered Simes the choice of either a one-time payment of $1,400,000 today or a series of 5 year-end payments of $400,000. a. If Simes has a cost of capital of 8%, which form of payment should it choose? b. What yearly payment would make the two offers identical in value at a cost of capital of 8%? c. What would be your answer to part a of this problem if the yearly payments were made at the beginning of each year? d. The after-tax cash inflows associated with this purchase are projected to amount to $260,000 per year for 15 years. Will this factor change the firm's decision about how to fund the initital investment