Payback period was the earliest Select selection criterion. The select is a "break even calculation in the sense that if a project's cash flows come in at the expected rate, the project will break even the equation is: Number of Unreserlot at start your Payback = years prior to + case for being til recome you full recovery The latest project's payback, the better the projects. However, payback has 3 main disadvantages (1) All dollars received in different years are given Select weight. (2) Chuh Nows beyond the payback year are ignored. (3) The payback merely indicates when a project's Investment will be recovered. There is no necessary relationship between a given payback and Investor wealth maximization A variant of the regular payback is the discounted payback. Unlike regular payback, the discounted payback considers Select costs. However, the discounted payback till disregards cash flows Seled the payback year. In addition, there is no specific payback rule to justify project acceptance. Both methods provide information about Select and risk Quantitative Problem: Bellinger Industries is considering the projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project Bellinger's WACC is 9% Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis, Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9% 0 1 2 Project A Project B - 1.200 -1,200 700 300 390 325 200 350 250 700 What is Project A's payback? Do not round Intermediate calculations, Round your answer to four decimal places years What is Project A's discounted payback? Do not round Intermediate calculations, Round your answer to four decimal places years What is Project 's payback? Do not round intermediate calculations, Round your answer to four decimal places years What is Project B's discounted payback? Do not round Intermediate calculations, Round your answer to four decimal places years