Determining the payback period

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Wilson's Market is considering two mutually exclusive projects. The required rate of return is 8% for Project A and 10% for Project B. Project A has an initial cost of $50,000, and should produce cash inflows of $26,000, $29,000, and $32,000 for Years 1 to 3, respectively. Project B has an initial cost of $70,500, and should produce cash inflows of $0, $45,000, and $53000, for Years 1 to 3, respectively. Based on IRR, which project, if either, should be accepted and why? Based on the Payback Period, which project, if any,  should be accepted if the cutoff point is 2.2 years.

Reference no: EM133068086

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