Global Toys, Inc., 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 –$ 56,000 –$ 101,000
1 22,500 24,500
2 29,600 29,500
3 24,500 29,500
4 10,500 239,000
Requirement 1: What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
Payback period Project A ________ years Project B___________ years
Requirement 2: Should it accept either of them? (Click to select)
Accept project B and reject project A_____
Reject both projects A and B________
Accept project A and reject project B__________
Accept both projects A and B________