Marge Simpson Inc. has following business opportunities with following cash flow information. Assume Marge’s opportunity cost of capital is 12%.
Year |
Project A |
Project B |
0 |
−$20,000 |
−$20,000 |
1 |
15,000 |
2,000 |
2 |
15,000 |
2,500 |
3 |
13,000 |
3,000 |
4 |
3,000 |
50,000 |
Calculate payback period for both projects.
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