A company uses the payback method to evaluate capital budgeting projects.It is currently considering projects A, B and C.

Project AProject BProject C

Initial cost (cash outflow)$10,000$10,000$10,000

Cash inflows:

1^styear$1,000$10,000$5,000

2^ndyear$9,000$1,000$5,000

3^rdyear$15,000- 0 -$35,000

a)Find the payback period for each of the above capital budgeting projects.Label the payback period for each project so I can see which payback period goes with which project.

b)What two major weaknesses of the payback method are illustrated by this problem?Explain each.