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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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