Given the following two projects and their cash flows,

, calculate the discounted payback period with a discount rate of 6%, 8%,and 18%.

What do you notice about the payback period as the discount rate rises? Explain this relationship.

With a discount rate of 6%,

the cash outflow for project A is:

A. recovered in 5 years.

B.recovered in 3.16 years.

C.recovered in 3 years.

D.never fully recovered.

Cash Flow	A		B
Cost	$8,000		$100,000
Cash flow year 1	$2,857		$10,000
Cash flow year 2	$2,857		$20,000
Cash flow year 3	$2,857		$30,000
Cash flow year 4	$2,857		$40,000
Cash flow year 5	$2,857		$15,000
Cash flow year 6	$2,857		$0