A firm is evaluating two projects that are independent with initial investments and cash flows as follows:

Project A			Project B
Initial Investment	End- of-Year Cash Flows		Initial Investment	End- of-Year Cash Flows
-$40,000	$20,000		-$90,000	$40,000
	20,000			40,000
	20,000			80,000

If the firm has a required discounted payback of three years with a WACC of 3.5%, it should ________.

a.

accept Project A and reject Project B

b.

reject Project A and accept Project B

c.

accept Project A and Project B

d.

reject both the projects