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Required projects with the cash flows

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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 12 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 -39,000 29,000 49,000 20,000  

Project B Cash Flow -49,000 29,000 39,000 69,000

Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected?

Reference no: EM132480949

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