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Walters Ltd is planning an expansion programme. The company has received information pertaining to TWO long term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows.

	$ Project Amicus	Project Friendship
Year	Installed cost	Installed cost
0	(105,000)	(500,000)
1	7,000	150,000.
2	3,000	150,000.
3	6,000	150,000.
4	55,000	150,000
5	108,000	150,000
5 Salvage value	50,000	15,000

The cost of capital is 14%. Required:

a. Payback period

	Project A		Project F
Year	Cash Flow	Cumulative cash flow
0	(105,000)
1	7,000
2	3,000
3	6,000
4	55,000.
5	108,000.		Payback = Initial Cost/ Annual cashflow Payback=
5	50 000
Payback=