Kara, Incorporated, imposes a payback cutoff of three years for its international investment projects. Assume the company has the
following two projects available.
Year
Cash Flow (A)
Cash Flow (B)
0
-$ 62,000
-$ 107,000
1
25,500
27,500
2
33,200
32,500
3
27,500
26,500
4
13,500
233,000
a. What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. Which, if either, of the projects should the company accept?
a. Project A
Project B
b. Project acceptance
years
years