Question 2Your company is currently considering two investment projects. Each project requires an upfront expenditure of $25 million. You estimate that the cost of capital is 10% and the investments will produce the following after tax cash flows:Year Project A Project B1 $5,000,000 $20,000,0002 $10,000,000 $10,000,0003 $15,000,000 $8,000,0004 $20,000,000 $6,000,000 a) Calculate the payback period for both projects, then compare to identify which project the firm should undertake. b) Evaluate the advantages and disadvantages of using the payback method in investment decisions and assess the situations where it should be used.

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A: Payback period is the time required to recover the investment.

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Q: net present value for

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Q: what was the amount of the original investment? *

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A: given, year A B C 0 -40000 -40000 -40000 1 13000 7000 19000 2 13000 10000 16000 3 13000…

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.