Discounted payback: Timeline Manufacturing Co. management is evaluating two projects. The company uses payback criteria of three years or less. Project A has a cost of $1,912,855, and project B's cost is $1,875,000. Cash flows from both projects are given in the following table. What are their discounted payback periods, and which will be accepted with a discount rate of 8 percent?
|
Year
|
Project A
|
Project B
|
|
1
|
$ 186,212
|
$516,212
|
|
2
|
393,562
|
613,277
|
|
3
|
497,594
|
731,199
|
|
4
|
485,552
|
|