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 8 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: -25,000 15,000 35,000 6,000

Project B Cash Flow: -35,000 15,000 25,000 55,000

Use the PI decision rule to evaluate these projects; accept the project with the higher PI value.

A. accept A, reject

B. accept neither A nor B

C. reject A, accept B

D. accept both A and B