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Your division is considering two investment projects, each of which requires an up-front expenditure of $28 million. You estimate that the cost of capital is
Your division is considering two investment projects, each of which requires an up-front expenditure of $28 million. You estimate that the cost of capital is 11% and that the investments will produce the following after-tax cash flows (in millions of dollars):
Year | Project A | Project B |
1 | 5 | 20 |
2 | 10 | 10 |
3 | 15 | 8 |
4 | 20 | 6 |
- What is the regular payback period for each of the projects? Round your answers to two decimal places. Project Ayears Project Byears
- What is the discounted payback period for each of the projects? Round your answers to two decimal places.
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