How long will it take for bill to recoup his initial

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Bill Williams has the opportunity to invest in project A that costs $6,200 today and promises to pay annual cash flows of $2,300, $2,500, $2,500, $2,000 and $1,800 over the next 5 years. Or, Bill can invest in $6,200 in project B that promises to pay annual cash flows of ?$1,500, $1,500, $1,500, $3,600 and $4,100 over the next 5 years. 

a. How long will it take for Bill to recoup his initial investment in project? A?

b. How long will it take for Bill to recoup his initial investment in project? B?

c. Using the payback? period, which project should Bill? choose?

d. Do you see any problems with his? choice?

Reference no: EM132012211

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