Firm is considering two mutually exclusive

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Reference no: EM131935740

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 -26,000 16,000 36,000 7,000 Project B Cash Flow -36,000 16,000 26,000 56,000 Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected? reject A, accept B accept both A and B accept A, reject B accept neither A nor B.

Reference no: EM131935740

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