Question: Long-term investmentdecision, payback method Personal Finance Problem Bill Williams has the opportunity to invest in project A that costs $8,400 today and promises to pay

Long-term investmentdecision, payback method Personal Finance ProblemBill Williams has the opportunity to invest in project A that costs $8,400 today and promises to pay annual cash flows of $2,100 , $2,600, $2,600 ,$2,000 and $1,700 over the next 5 years. Or, Bill can invest $8,400 in project B that promises to pay annual cash flows of $1,400, $1,400, $1,400, $3,400 and $3,900 over the next 5 years.(Hint: For mixed stream cashinflows, calculate cumulative cash inflows on ayear-to-year basis until the initial investment is recovered.)

a.How long will it take for Bill to recoup his initial investment in projectA?

b.How long will it take for Bill to recoup his initial investment in projectB?

c.Using the paybackperiod, which project should Billchoose?

d.Do you see any problems with hischoice?

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