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 30,000 20,000 40,000 11,000 Project B Cash Flow 46,000 20,000 30,000 60,000 Use the discounted payback decision rule to evaluate these projects; which one(s) should it be accepted or rejected?

Multiple Choice

a) accept both A and B b) reject A, accept B c) accept neither A nor B d) accept A, reject B