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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:0123 Project A Cash Flow-28,00018,00038,0009,000 Project B Cash Flow-38,00018,00012,00058,000

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92753557

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