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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
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.
reject Project A and accept Project B
b.
reject both the projects
c.
accept Project A and reject Project B
d.
accept Project A and Project B
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