VWX Inc is considering two projects, Project G and Project H Both projects require an initial investment of GBP 65,000 The projected cash flows are as follows Year Cash flows (Project G) Cash flows (Project H) (Initial Investment) (65,000) (65,000) 1 20,000 15,000 2 15,000 25,000 3 10,000 20,000 4 5,000 15,000 a Calculate the payback period for both projects b Based on the payback period and a cutoff period of 3 years, which project should VWX Inc choose Explain your reasoning

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Question: VWX Inc. is considering two projects, Project G and Project H. Both projects require an initial investment of GBP 65,000. The projected cash flows are

VWX Inc. is considering two projects, Project G and Project H. Both projects require an initial investment of GBP 65,000. The projected cash flows are as follows:

Year	Cash flows (Project G)	Cash flows (Project H)
(Initial Investment)	(65,000)	(65,000)
1	20,000	15,000
2	15,000	25,000
3	10,000	20,000
4	5,000	15,000

a. Calculate the payback period for both projects.

b. Based on the payback period and a cutoff period of 3 years, which project should VWX Inc. choose? Explain your reasoning.

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