The Basics of Capital Budgeting: Evaluating Cash Flows: Payback Payback was the earliest selection criterion. The is a "break-even" calculation in the sense that if a project's cash flows come in at the expected rate, the project will break even. The equation is: Number of Payback=fullrecoveryyearspriorto+CashflowduringfullrecoveryyearUnrecoveredcostatstartofyear The a project's payback, the better the project is. However, payback has 3 main disadvantages: (1) Dollars received in different years are given weight. (2) Cash flows beyond the payback year are ignored. (3) The payback merely indicates when a project's investment is recovered. There is no necessary relationship between a given payback and investor wealth maximization. A variant of the regular payback is the discounted payback. Unlike regular payback, the discounted payback considers costs. However, the discounted payback still disregards cash flows the payback year. In addition, there is no specific payback rule to justify project acceptance. Both methods provide information about and risk. 11%. What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years