How long will it take bill to recoup his initial investment

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Reference no: EM13923887

Bill Williams has opportunity to invest in project A that costs 5500 today and promises to pay annual cash flows of 2200, 2600,2600, 1900, 1800 over the next 5 years. Or bill can invest 5500 on project B that promises to pay annual cash flow of 1300 , 1300, 1300, 3500 and 3900over next 5 years . Hint for mixed stream cash inflows calculate cumulative cash inflows on a year to year basis until the initial investment is recovered

1. How long will it take bill to recoup his initial investment in project A round 2 decimal places

2. How long will it take bill to recoup his initial investment in project B round 2 decimal places

3. Using the payback period which project should bill choose

4. Do you see any problems with his choice?

Reference no: EM13923887

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