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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 9 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 -26,000 16,000 36,000 7,000 Project B Cash Flow -36,000 16,000 26,000 56,000 Use the PI decision rule to evaluate these projects; which one(s) should be accepted or rejected? reject A, accept B accept both A and B accept A, reject B accept neither A nor B.

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Financial Management, Finance

Category:- Financial Management
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