1. The cash flows associated with an investment project are as follows:

Initial Outflow

-$70,000

Year 1

$20,000

Year 2

$30,000

Year 3

$30,000

Year 4

$30,000

a) What’s the payback period of the project? If a firm’s cutoff payback period is 3 years, should it accept the project?

b) If a firm uses discounted payback with a 15% discount rate and a 3-year cutoff period, what’s the discount payback period of the project? Should the firm accept the project?

Please provide clear steps on how the answers came about. If using BAii Plus calculator, please expand on functions used.