Payback period Joe’s Beef Barn is planning to purchase a new meat grinding machine. They have two options. Option A is expected to generate net cash flows of $35,000 for the next 10 years and has a NINV of $270,000. Option B is a 7-year project that is expected to generate the following net cash flows:

$14,000 at the end of time one, 13,800 at the end of time two, 11,430 at the end of time three, and 17,200 at the end of times four through seven. Project B has a NINV of $95,000. Joe makes all of his capital budgeting decisions based upon the payback period. Which project is better?