1. (Provide Explanation)

Project	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
	Cash Flow	Cash Flow	Cash Flow	Cash Flow	Cash Flow	Cash Flow
A	-14000	6000	6000	6000	6000	6000
B	-15000	7000	7000	7000	7000	7000
C	-18000	12000	2000	2000	2000	2000

The cash flows for three projects are shown above. The cost of capital is 9.5%. If an investor decided to take projects with a payback period of 2 years or less, which of these projects would he take?

A) Investment A

B) Investment B

C) Investment C

D) none of these investments