Your firm is considering two mutually exclusive

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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 11 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:    -38,000    28,000    48,000 19,000   

Project B Cash Flow:    -48,000    28,000    38,000 68,000

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

A) reject A, accept B

B) accept A, reject B

C) accept both A and B

D) accept neither A nor B

Reference no: EM131850146

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