Consider the following two mutually exclusive projects:

The required return is 15 percent for both projects. Which one of the following statements related to these projects is correct?

1- Because both the IRR and the PI imply accepting Project B, that project should be accepted.

2- NPV, IRR, and PI all imply accepting Project A.

3- The IRR decision rule should be used as the basis for selecting the project in this situation.

4- The profitability rule implies accepting Project A.

5- Only NPV implies accepting Project A.

Year Cash Flow (A Cash Flow (B) $317,000$26,500 $27,700 $56,000 $10,536 55,000 $11,849 399,000 $13,814 0 $9,057 4