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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 -25,000 15,000 35,000 6,000 Project B Cash Flow -35,000 15,000 15,000 55,000 Use the payback decision rule to evaluate these projects; which one(s) should be accepted or rejected? ? accept neither A nor B ? reject A, accept B ? accept both A and B ? accept A, reject B

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Financial Management, Finance

Category:- Financial Management
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