1. You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.

   	Project A	Project B
   	Year Cash Flow	Year Cash Flow
   	0 -$87,000	0 -$85,000
   	1 $31,000	1 $15,000
   	2 $37,000	2 $20,000
   	3 $44,000	3 $90,000
   Required rate of return	9 percent	14 percent
   Required payback period	2.5 years	2.5 years
   Required accounting return	10 percent	11 percent

   Should you accept or reject these projects based on net present value analysis?

   		accept Project A and reject Project B
   		reject Project A and accept Project B
   		accept both Projects A and B
   		reject both Projects A and B
   		You cannot make this decision based on net present value analysis.