Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.

Time:	0	1	2	3
Project A Cash Flow	-23,000	13,000	33,000	4,000
Project B Cash Flow	-33,000	13,000	23,000	53,000

Use the NPV decision rule to evaluate these projects; which one(s) should it be accepted or rejected? rev: 12_04_2012

A accept neither A nor B

B reject A, accept B

C accept A, reject B

D accept both A and B