(b) In order to choose between Project A and Project B, the project planner must make a decision. The following data pertains to the projects:
Project P Project Q
Capital cost of asset 60,000 60,000
Profits before depreciation
Project A Project B
Year 1 20,000 50,000
Year 2 30,000 20,000
Year 3 40,000 5,000
Year 4 50,000 5,000
Year 5 60,000 5,000
(i) From the analysis using payback period method, which project will be more preferred?