1. Siegel Industries is considering two capital budgeting projects. Project A requires an initial investment of $48,000. It is expected to produce net annual cash inflows of $7,000. Project B requires an initial investment of $75,000 and is expected to produce net annual cash inflows of $12,000.

Using the cash payback technique to evaluate the two projects, Siegel should accept:

1- Project A because it has a shorter cash payback period.

2- Project B because it has a shorter cash payback period.

3- Project A because it requires a smaller initial investment.

4- Project B because it produces a larger net annual cash flow