1. (6%) Projects A and B have the following cash flows: C0 C1 C2 C3 C4 A (100) 60 50 (40) 30

B (80) 40 0 0 100

1) If a company uses the payback rule with a cutoff period of 2 years, which projects would it accept? 2) Which project(s) will the company choose given an opportunity cost of capital of 10%?