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Sohar Industries is in the process of choosing the better of two equal-risk, mutually exclusive projects - A and B. The relevant cash flows for
Sohar Industries is in the process of choosing the better of two equal-risk, mutually exclusive projects - A and B. The relevant cash flows for each project are shown in the following table. Evaluate the following projects using the payback method assuming a rule of 3 years for payback. Year Project B - 10,000 0 1 Project A - 10,000 4,000 4,000 4,000 4,000 2 3 3,000 2,000 1,000,000 4 0 Which project would you select using the Payback Period (PBP) method? Select one: a. Project A can be accepted because the payback period is 2.5 years but Project 8 cannot be accepted because its payback period is longer than 3 years b. Both projects can be accepted because the payback is less than 3 years. FUUUU 4,000 4,000 4,000 3,000 4,000 2,000 0 1,000,000 Which project would you select using the Payback Period (PBP) method? Select one: a. Project A can be accepted because the payback period is 2.5 years but Project B cannot be accepted because its payback period is longer than 3 years b. Both projects can be accepted because the payback is less than 3 years c. Project B should be accepted because even though the payback period is 2.5 years for Project A and 3.001 for project B, there is a 1,000,000 payoff in the 4th year in Project B. d. Project B should be accepted because you get more money paid back in the long run. e. None of the answers are correct
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