Should be accepted or rejected use the pi decision rule

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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 8 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      -20,000      10,000      30,000      1,000

Project B Cash Flow        -30,000      10,000      20,000         50,000

Question 1: Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected?

Reference no: EM132532759

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