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Given the cash flow of two projectsA and Bin the following table, LOADING... , and using the payback period decision model, which project(s) do you

Given the cash flow of two

projectsA

and

Bin

the following table,

LOADING...

,

and using the payback period decision model, which project(s) do you accept and which project(s) do you reject if you have a

3-year

cutoff period for recapturing the initial cash outflow? For payback period calculations, assume that the cash flow is equally distributed over the year.

Cash Flow

A

B

Cost

$12,000

$95,000

Cash flow year 1

$6,000

$19,000

Cash flow year 2

$6,000

$9,500

Cash flow year 3

$6,000

$38,000

Cash flow year 4

$6,000

$28,500

Cash flow year 5

$6,000

$0

Cash flow year 6

$6,000

$0

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