Suppose your firm is considering two mutually exclusive projects with the cash flows shown below. The required rate of return on both projects is 10 percent. Both projects have an allowable payback statistic of 2.5 years and a discounted payback statistic of 3.5 years. Use the IRR decision rule to evaluate these projects. Which project should be accepted and which one should be rejected? (Hint: Remember both the payback period and IRR constraints need to be satisfied in order to choose the correct mutually exclusive projects.)

Time	0	1	2	3
Project A Cash Flow	-1,000	300	400	700
Project B Cash Flow	-500	200	400	300