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ABC Company has two independent projects with the following cash flows: Year o Year 1 Year 2 Year 3 ($10,000) $5,000 $6,000 Project A: $8,000
ABC Company has two independent projects with the following cash flows: Year o Year 1 Year 2 Year 3 ($10,000) $5,000 $6,000 Project A: $8,000 Project B: $2,000 ($10,000) $6,000 $4,500 The cost of capital for both projects is 7%. If the company requires a 2-year cut-off payback period for any project, what decision will the company make using the payback period rule? Accept both projects Reject both projects O Accept B only No decision can be made with the above information. O Accept A only
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