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 10 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	-27,000	17,000	37,000	8,000
Project B Cash Flow	-37,000	17,000	27,000	57,000

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

rev: 05_15_2019_QC_CS-167992

Multiple Choice

• reject A, accept B

• accept neither A nor B

• accept A, reject B

• accept both A and B