Discounted payback decision rule to evaluate these projects

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Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time: 0 1 2 3 Project A Cash Flow -31,000 21,000 41,000 12,000 Project B Cash Flow -41,000 21,000 31,000 61,000 Use the discounted payback decision rule to evaluate these projects; which one(s) should be accepted or rejected?

Reference no: EM131973386

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