Question: 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

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 10 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years, respectively. Show calculations

Time 0 1 2 3

A cash Flow -1000 300 400 700

B Cash Flow -500 200 400 300

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

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