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 -29,000 19,000 39,000 10,000 Project B Cash Flow -39,000 19,000 29,000 59,000
Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected?
accept A, reject B - A
reject A, accept B - B
accept neither A nor B - C
accept both A and B - D
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 | -29,000 | 19,000 | 39,000 | 10,000 |
| Project B Cash Flow | -39,000 | 19,000 | 29,000 | 59,000 |
Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected?
accept A, reject B - A
reject A, accept B - B
accept neither A nor B - C
accept both A and B - D
Related questions
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 | -29,000 | 19,000 | 39,000 | 10,000 |
| Project B Cash Flow | -39,000 | 19,000 | 11,000 | 59,000 |
Use the payback decision rule to evaluate these projects; which one(s) should it be accepted or rejected?
accept both A and B
accept A, reject B
accept neither A nor B
reject A, accept B
