. Shell Camping Gear, Inc., is considering two mutually exclusive projects.Each requires an…

Shell Camping Gear, Inc., is considering two mutually exclusive projects.Each requires an initial investment of $100,000.John Shell, president of the company, has set a maximum payback period of 4 years.The after-tax cash inflows associated with each project are shown in the following table:

  Cash inflows (CFt)
Year Project A (in Birr) Project B (in Birr)  
1 10,000 40,000  
2 20,000 30,000  
3 30,000 20,000  
4 40,000 10,000  
5 20,000 20,000  

Required:Determine the payback periodof each project.Which project should be accepted?

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