Matt Is Analyzing Two Mutually Exclusive Projects of Similar Size

question 87

Multiple Choice

Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data.Both projects have 5 year lives. $$\begin{array} { l l l } & \frac { \text { Project } \mathrm { A } } { } & \frac { \text { Project B } } { } \\\text { Net present value } & \$ 15,090 & \$ 14,693 \\\text { Payback period } & 2.76 \text { years } & 2.51 \text { years } \\\text { Required return } & 8.3 \% & 8.0 \%\end{array}$$ Matt has been asked for his best recommendation given this information.His recommendation should be to accept:

• A)project B because it has the shortest payback period.
• B)both projects as they both have positive net present values.
• C)project A and reject project B based on their net present values.
• D)project B and reject project A based on other criteria not mentioned in the problem.
• E)project B and reject project A based on both the payback period and the average accounting return.

---

Definitions:

Personal Attack

An aggressive statement or action directed at an individual, often aiming to hurt or discredit them.

Schizoid

A personality disorder characterized by a long-term pattern of detachment from social relationships and a limited range of emotional expression.

Emotional Responsiveness

Reflecting a range of appropriate and contextual emotions to different situations and individuals.

Biological Accounts

Explanations of behavior and mental states that are based on neurobiological factors, such as genetics, brain structures, and neurochemical imbalances.