Here are the expected cash flows for three projects:

Cash Flows (dollars)ProjectYear:01234A5,600+1,150+1,150+3,3000B1,6000+1,600+2,300+3,300C5,600+1,150+1,150+3,300+5,300

a.What is the payback period on each of the projects?

b.If you use a cutoff period of 2 years, which projects would you accept?

• Project A
• Project B
• Project C
• Project A and Project B
• Project B and Project C
• Project A and Project C
• Projects A, B, and C
• None

c.If you use a cutoff period of 3 years, which projects would you accept?

• Project A
• Project B
• Project C
• Project A and Project B
• Project B and Project C
• Project A and Project C
• Projects A, B, and C
• None

d-1.If the opportunity cost of capital is 9%, calculate the NPV for projects A, B, and C.(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

d-2.Which projects have positive NPVs?

• Project A
• Project B
• Project C
• Project A and Project B
• Project B and Project C
• Project A and Project C
• Projects A, B, and C
• None

e."Payback gives too much weight to cash flows that occur after the cutoff date." True or false?

• True
• False

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