Cash Flows Project A ($ in millions) Project B ($ in millions) Initial Outflow – 211 – 82 Year 1 43 22 Year 2 71 40 Year 3 66 40 Year 4 65 12 If the company uses discounted payback with a 12% discount rate and a 4-year cut-off period, which projects will it accept?

Cash Flows Project A ($ in millions) Project B ($ in millions) Initial Outflow – 211 – 82 Year 1 43 22 Year 2 71 40 Year 3 66 40 Year 4 65 12 If the company uses discounted payback with a 12% discount rate and a 4-year cut-off period, which projects will it accept?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Cash Flows	Project A ($ in millions)	Project B ($ in millions)
Initial Outflow	– 211	– 82
Year 1	43	22
Year 2	71	40
Year 3	66	40
Year 4	65	12

If the company uses discounted payback with a 12% discount rate and a 4-year cut-off period, which projects will it accept?

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