A firm is considering the following three investment projects. The firm doesn't want to make any investment that takes more than three years to recover their initial investment.

Year             A                      B                     C

0              $(950)          $(9,000)           $5,500)             

1                 650               4,500              1,500

2                 250              3,500               1,500

3                160               3,500                2,500

4                  60               3,500                2,500

5                 480              3,500               2,500

a) Given company's 3 year payback period, which of the projects will qualify for acceptance?

b) Rank projects using their payback period. Which looks best and why?

c) If company uses a 9.8% discount rate to analyze projects. What is company's payback period for each project.