Samuelson Electronics Has a Required Payback Period of Three Years

question 87

Multiple Choice

Samuelson Electronics has a required payback period of three years for all of its projects. Currently, the firm is analyzing two independent projects. Project A has an expected payback period of 2.9 years and a net present value of $4,200. Project B has an expected payback period of 3.1 years with a net present value of $26,400. Which project(s) should be accepted based on the payback decision rule? 

• A) Project A only 
• B) Project B only 
• C) Both A and B 
• D) Neither A nor B 
• E) Either, but not both projects 

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Definitions:

Development of Industries

The process of economic and social transformation that involves the growth and expansion of various sectors within an economy.

Veto Power

The authority to reject or block a decision, proposal, or law, often held by an executive branch over legislative actions.

Legislative Branch

The part of government responsible for making laws, consisting of legislatures or parliaments.

Contract Clause

The clause in the U.S. Constitution that prohibits the government from unreasonably interfering with an existing contract.