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 0 1 2 3 Project A Cash Flow -22,000 12,000 32,000 3,000 Project B Cash Flow -32,000 12,000 22,000 52,000 Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected? Multiple Choice A. Reject A, accept B B. Accept both A and B C. Accept neither A nor B D. Accept A, reject B
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 0 1 2 3 Project A Cash Flow -22,000 12,000 32,000 3,000 Project B Cash Flow -32,000 12,000 22,000 52,000 Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected? Multiple Choice A. Reject A, accept B B. Accept both A and B C. Accept neither A nor B D. Accept A, reject B
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 13P
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Question
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required
| Time | 0 | 1 | 2 | 3 |
| Project A Cash Flow | -22,000 | 12,000 | 32,000 | 3,000 |
| Project B Cash Flow | -32,000 | 12,000 | 22,000 | 52,000 |
Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected?
Multiple Choice
A. Reject A, accept B
B. Accept both A and B
C. Accept neither A nor B
D. Accept A, reject B
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