Reference no: EM132530890
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 10 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.
Time:0123 Project A Cash Flow-27,00017,00037,0008,000 Project B Cash Flow-37,00017,00027,00057,000
Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected?
rev: 08_09_2017_QC_CS-95131
Multiple Choice
-accept A, reject B
-accept neither A nor B
-accept both A and B
-reject A, accept B