Projects A and B are mutually exclusive and have an initial cost of $78,000 each.

Project A has annual cash flows for Years 1 to 3 of $28,300, $31,500, and $32,000, respectively.

Project B has annual cash flows for Year 1 to 3 of $36,900 and $40,500, and 13,000 respectively.

Which of the following statement is correct

A

The cross over rate is 5.25%. Accept project B if the required return is less than 5.25%. Accept project A if the required return is between 5.25% and 8.43%. Turn down both project if the required return is higher than 8.43%

B

The cross over rate is 5.25%. Accept project A if the required return is less than 5.25%. Accept project B if the required return is between 5.25% and 8.43%. Turn down both project if the required return is higher than 8.43%

C

The cross over rate is 5.25%. Accept project B if the required return is less than 5.25%. Accept project A if the required return is between 5.25% and 8.98%. Turn down both project if the required return is higher than 8.98%

D

The cross over rate is 5.25%. Accept project A if the required return is less than 5.25%. Accept project B if the required return is between 5.25% and 8.98%. Turn down both project if the required return is higher than 8.98%

E

The IRR of project A is 8.43% and the IRR of project B is 8.98%. Accept project B and reject project A