Question
Donna is considering two projects, both of which have an initial cost of $18,000 and total cash inflows of $29,000.00. The cash inflows of project
Donna is considering two projects, both of which have an initial cost of $18,000 and total cash inflows of $29,000.00. The cash inflows of project X are $4,000.00, $6,000.00, $9,000.00, and $10,000.00 over the next four years, respectively. The cash inflows for project Y are $10,000.00, $9,000.00, $6,000.00, and $4,000.00 over the next four years, respectively. Which one of the following statements is correct if Donna requires a 9% rate of return and has a required discounted payback period of 3 years? a) Project X should be accepted and project Y should be rejected. b) Both projects should be accepted. c) Both projects should be rejected. d) You should be indifferent to accepting either or both projects. e) Project X should be rejected and project Y should be accepted
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