MNO Industries is considering two potential projects, Project A and Project B, each requiring an initial investment of INR 100,000 The cash flows are given as follows Year Cash flows (Project A) Cash flows (Project B) (Initial Investment) (100,000) (100,000) 1 30,000 20,000 2 40,000 30,000 3 20,000 40,000 4 10,000 30,000 a Determine the payback period for both projects b Based on the payback period, which project should MNO Industries choose if their cutoff period is 2 5 years Explain your rationale

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Question: MNO Industries is considering two potential projects, Project A and Project B, each requiring an initial investment of INR 100,000. The cash flows are given

MNO Industries is considering two potential projects, Project A and Project B, each requiring an initial investment of INR 100,000. The cash flows are given as follows:

Year	Cash flows (Project A)	Cash flows (Project B)
(Initial Investment)	(100,000)	(100,000)
1	30,000	20,000
2	40,000	30,000
3	20,000	40,000
4	10,000	30,000

a. Determine the payback period for both projects.

b. Based on the payback period, which project should MNO Industries choose if their cutoff period is 2.5 years? Explain your rationale.

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