Shell Camping Gear, Inc., is considering two mutually exclusive projects. Each requires an initial investment of $100,000. John Shell, president of the company, has set a maximum payback period of 4 years. The after-tax cash inflows associated with each project are shown in the following table:

Determine the payback/discounted payback period of each project.

b. Because they are mutually exclusive, must choose one. Which should the company invest in?

c. Explain why one of the projects is a better choice than the other.

\begin{tabular}{lrr} & \multicolumn{2}{c}{ Cash inflows (CFt)} \\ \cline { 2 - 3 } Year & Project A & Project B \\ \hline 1 & $10,000 & $40,000 \\ 2 & 20,000 & 30,000 \\ 3 & 30,000 & 20,000 \\ 4 & 40,000 & 10,000 \\ 5 & 20,000 & 20,000 \end{tabular}