Jan Booth is considering investing in either a storage facility or a car wash facility. Both projects have a five-year life and require an investment of $400,000. The cash flow patterns for each project are given below.

Storage facility: Even cash flows of $150,000 per year

Car wash: $112,700, $143,000, $62,000, $121,000, and $94,000

Required:

1. Calculate the payback period for the storage facility (even cash flows). Round your answer to one decimal place. fill in the blank 1 years

2. Calculate the payback period for the car wash facility (uneven cash flows). Round your answer to three decimal places. fill in the blank 2 years

Which project should be accepted based on payback analysis?

Car washStorage facility

3. What if a third mutually exclusive project, a laundry facility, became available with the same investment and annual cash flows of $180,000?

It has a shorter payback period and provides more cash flow over its life.It has a longer payback period and provides less cash flow over its life.

Now which project would be chosen?

Car washLaundry facilityStorage facility