1. Consider the following three-year project. The initial after-tax outlay or after-tax cost is $1,500,000. The future after-tax cash inflows for years 1, 2, 3 and 4 are: $800,000, $800,000, $300,000 and $100,000, respectively. What is the payback period without discounting cash flows?

a. 1.875 years

b. 2.0 years

c. 3.5 years

d. 4.125 years

2. Carvic, Inc. is considering a four-year project that has an initial outlay or cost of $100,000. The respective future cash inflows from its project for years 1, 2, 3 and 4 are: $50,000, $40,000, $30,000 and $20,000. Will it accept the project if it's payback period is 26 months?

a. No, because it pays back in over 31 months

b. No, because it pays back in 28 months

c. No, because it pays back in over 35 months

d. Yes, because it pays back in 25 months