Consider the following projects:

Cash Flow

Project C₀ C₁ C₂ C₃ C₄ C₅

A -1,000 +1,000 0 0 0 0

B -2,000 +1,000 +1,000 +4,000 +1,000 +1,000

C -3,000 +1,000 +1,000 0 +1,000 +1,000

(a) [8 points] If the discount rate is 10%, which projects have a positive NPV?

(b) [8 points] Calculate the payback period for each project.

(c) [4 points] Which project(s) would a firm using the payback rule accept if the cutoff period were three years?