Consider the following two mutually exclusive projects:
Year Cash Flow
(A) Cash Flow
(B)
0 –$ 354,000 –$ 48,000
1 41,000 23,600
2 61,000 21,600
3 61,000 19,100
4 436,000 14,200
Whichever project you choose, if any, you require a 14 percent return on your investment.
What is the payback period for each project?
What is the discounted payback period for each project?