Question: Evaluate the following projects using the payback method assuming a rule of 4 years for payback. Year Project A Project B 0. -10,000 -10,000 1.

Evaluate the following projects using the payback method assuming a rule of 4 years for payback.

Year Project A Project B

0. -10,000 -10,000

1. 4000 4000

2. 4000 3000

3. 4000 2000

4. 0. 1,000,000

A.

Project A can be accepted because the payback period is 2.5 years but Project B cannot be accepted because its payback period is longer than 3 years.

B.

Project B should be accepted, since there is a $1,000,000 payoff in the 4th year in Project B

C.

Project B should be accepted because you get more money paid back in the long run.

D.

Both projects can be accepted because the payback is less than 4 years.

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