a) What is the payback period for project A and B? (b) According to the method of payback period, which project do you prefer? (%2) (%) (c) Use profitability Index (PI) to evaluate these two projects in the discount rate of 12%. (%8) (d) Which project will you prefer? Give your reason. (2)

8. Fuji Software Inc. has the following mutually exclusive projects: Year 0 1 2 3 Project A -$7,500 $4,000 $3,500 $1,500 Project B -$5,000 $2,500 $1,200 $3,000 (a) What is the payback period for project A and B? (2% (b) According to the method of payback period, which project do you prefer? (3%) (C) Use profitability Index (PI) to evaluate these two projects in the discount rate of 12%. (8% (d) Which project will you prefer? Give your reason. (2%)