Problem 8-3 Calculating Payback [LO 1

] Global Toys, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year Cash Flow A Cash Flow B

0 $ 50,000 $ 95,000

1 19,500 21,500

2 26,000 26,500

3 21,500 32,500

4 7,500 245,000

Requirement 1: What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Payback period

Project A ___________ years

Project B ____________ years

Requirement 2:

Should it accept either of them?

Accept project A and reject project B Accept both projects A and B Reject both projects A and B Accept project B and reject project A