Payback

period.

What are the payback periods of projects E and F? Assume all the cash flow is evenly spread throughout the year. If the cutoff period is three years, which project(s) do you accept?

Cash Flow	E		F
Cost	$40,000		$105,000
Cash flow year 1	$8,000		$31,500
Cash flow year 2	$8,000		$42,000
Cash flow year 3	$8,000		$10,500
Cash flow year 4	$8,000		$21,000
Cash flow year 5	$8,000		$0
Cash flow year 6	$8,000		$0

What is the payback period for project E? (Round to one decimal place.)

With a three-year cutoff period for recapturing the initial cash outflow, project E would be accepted or rejected?

What is the payback period for project F? (Round to one decimal place.)

With a three-year cutoff period for recapturing the initial cash outflow, project F would be accepted or rejected?