A company is evaluating two mutually exclusive projects:

Project A has an initial investment of $$4,000,000$ and expected cash flows of $$1,200,000$ in Year $1,$

$$1,500,000$ in Year $2,$ $$1,800,000$ in Year $3,$ and $$900,000$ in Years $4$ and $5.$

Project B requires an initial investment of $$3,500,000$ and is expected to generate annual cash

flows of $$1,000,000$ for $6$ years.

The company's cost of capital is $11\%,$ and it uses a discounted payback period cutoff of $4$ years.

Which of the following statements is true?

Project B meets the discounted payback criterion, but has a lower NPV than Project A$,$ demonstrating that

satisfying multiple criteria doesn't guarantee the highest value creation.

Both projects fail to meet the discounted payback criterion, but Project A has a higher NPV$,$ showing that

strict short$-$term requirements might lead to rejecting the better long$-$term investment.

Project A would be chosen under the Discounted Payback method as well as Payback method and NPV

method.

Project A meets the discounted payback criterion, while Project B has a higher NPV$,$ highlighting how

different capital budgeting methods can lead to conflicting project rankings.