What is project discounted payback

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Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 7%.

0 1 2 3 4

Project A -950 700 405 270 320

Project B -950 300 340 420 770

a. What is Project A's payback? Round your answer to four decimal places. Do not round your intermediate calculations.

b. What is Project A's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.

c. What is Project B's payback? Round your answer to four decimal places. Do not round your intermediate calculations.

d. What is Project B's discounted payback? Round your answer to four decimal places. Do not round your intermediate calculations.

Reference no: EM131532596

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