A company plans to undertake an expansion project and is evaluating two proposals, A and B.

Proposal A Proposal B

Year 0 -$200,000 -$200,000 Year 1 $50,000 $70,000 Year 2 $50,000 $50,000 Year 3 $50,000 $45,000 Year 4 $50,000 $40,000 Year 5 $50,000 $40,000

Using the payback method which project would you select?

	1.	Project B because the Payback period is 3.875 year
	2.	Project A because the payback period is 4 years
	3.	Project B because the payback period is 3.825 years.
	4.	Project A because the payback period is 3.625 years.