Suppose Your Firm Is Considering Two Mutually Exclusive, Required Projects

question 45

Multiple Choice

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and three years, respectively. $$\begin{array} { l l l l l } \text { Time } & 0 & 1 & 2 & 3 \\\text { Project A Cash Flow } & - 20,000 & 10,000 & 30,000 & 1,000 \\\text { Project B Cash Flow } & - 30,000 & 10,000 & 20,000 & 50,000\end{array}$$ Use the discounted payback decision rule to evaluate these projects; which one(s) should be accepted or rejected?

• A)Accept both A and B
• B)Accept neither A nor B
• C)Accept A, reject B
• D)Reject A, accept B

---

Definitions:

State Constitutions

The fundamental laws and principles that establish the framework of governance within each of the United States.

Executive Branch

Part of the U.S. government responsible for enforcing laws, headed by the President and including cabinet departments and agencies.

Legislative Representation

The system in which elected officials are chosen to make laws and policies on behalf of their constituents within a governmental body.

Maryland's Government

The administrative and legislative structures ruling the state of Maryland, including its local, state, and judicial branches.