A firm has two projects with an initial investment of $25,000. The cash flows by year are listed below.The firms cost of capital is 55.

a What is the traditional payback period?

b. What is the discounted payback period?

Initial Outlay $25,000

Year Project X Cash Flows Project Y Cash Flows 2014 5,000 4,000 2015 4,000 10,000 2016 6,000 5,000 2017 6,000 6,000 2018 6,000 6,000