Question
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below....
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 12
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 |
-29,000 |
19,000 |
39,000 |
10,000 |
|
Project B Cash Flow |
-39,000 |
19,000 |
29,000 |
59,000 |
Use the PI decision rule to evaluate these projects; which one(s)
should it be accepted or rejected?
Homework Answers
Answer #1
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