Problem 11-2

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 7%.

	0		1		2		3		4
Project A	-900		600		415		270		320
Project B	-900		200		350		420		770

What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations. ___years

What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations. _____years

What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations. ____years

What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations. ___ years