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Shell is considering two mutually exclusive projects , A and B. Each requires an initial investment of $100,000. The company's president set a maximum simple
Shell is considering two mutually exclusive projects, A and B. Each requires an initial investment of $100,000. The company's president set a maximum simple payback period of 5 years. If the company expects to receive the following after-tax cash inflows from each project, which project should the company invest in?
| Year | Cash inflows project A | Cash inflows project B |
| 1 | $10,000 | $40,000 |
| 2 | $20,000 | $30,000 |
| 3 | $30,000 | $20,000 |
| 4 | $40,000 | $10,000 |
| 5 | $20,000 | $20,000 |
| a. | Project B | |
| b. | Either one | |
| c. | Project A | |
| d. | Neither one |
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