9. 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.

Time 0 1 2 3

Project A Cash Flow -20,000 10,000 30,000 1,000

Project B Cash Flow -30,000 10,000 20,000 50,000

Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected?Show your work.

10. Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half four and a half years, respectively.

Time 0 1 2 3 4 5 6

Cash Flow -5,000 1,300 1,400 1,600 1,600 1,100 2,000

Use the payback decision to evaluate this project; should it be accepted or rejected?What is the payback period? Show your work.