Jane is considering two projects both of which have an initial cost of $20,000. The cash inflows of project A are $3,000, $6,000, $12,000, and $15,,000 over the next four years, respectively. The cash inflows for project B are $10,000, $9,000, $5,000, and $3,000 over the next four years, respectively. Jane requires a 10 percent rate of return . What is the Payback period for each project? 

Would Jane consider using IRR as a different means of evaluating the project? ? Show calculations in detail and explain your answer.

 

 If the economy flourishes, Cheng's Plumbing stock is expected to return 22%. If the economy falls into a recession, the stock's return is projected at 5%. The probability of a boom is 75% while the probability of a recession is 15%. What is the variance of the returns on this stock?