Q#1 Payback period. Given the cash flow of two projectsA and Bin the followingtable, and using the payback period decisionmodel, whichproject(s) do you accept and whichproject(s) do you reject if you have a 3-year cutoff period for recapturing the initial cashoutflow? For payback periodcalculations, assume that the cash flow is equally distributed over the year.

What is the payback period for projectA? years?

Cash Flow A B

Cost $14,000 $90,000

Cash flow year 1 $5,600 $36,000

Cash flow year 2 $5,600 $27,000

Cash flow year 3 $5,600 $18,000

Cash flow year 4 $5,600 $9,000

Cash flow year 5 $5,600 $0

Cash flow year 6 $5,600 $0