Question: Your firm is considering two mutually exclusive projects with the cash flows shown below. The required rate of return on both projects is 8 percent.

 Your firm is considering two mutually exclusive projects with the cash

Your firm is considering two mutually exclusive projects with the cash flows shown below. The required rate of return on both projects is 8 percent. The maximum allowable payback and discounted payback periods for both projects are 2 and 3 years, respectively. Use the NPV decision rule to evaluate these projects. Which projects should be accepted/rejected? Time 0 1 2 3 -20,000 10,000 30,000 1,000 Project A Cash Flow Project B Cash Flow -30,000 10,000 20,000 50,000

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