P10-24 ALL TECHNIQUES, CONFLICTING RANKINGS. Nicholson Roofing Materials Inc. is considering two mutually exclusive projects that both cost $150,000. The company's board of directors has set a maximum four-year payback requirement; the cost of capital is 9%. The project cash flows appear below. Cash inflows Year Project A Project B1 $45,000 $75,0002 45,000 60,0003 45,000 30,0004 45,000 30,0005 45,000 30,0006 45,000 30,000
Calculate the payback period for each project.
a) Project A: 3.33 years; Project B: 2.5 years
b) Project A: 2.5 years; Project B: 3.33 years
c) Project A: 2 years; Project B: 2.5 years
d) Project A: 4 years; Project B: 3.33 years