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 -20,000 10,000 30,000 1,000

Project B Cash Flow -30,000 10,000 20,000 50,000

Use the payback decision rule to evaluate these projects; which one(s) should be accepted or rejected?

accept both A and B

reject A, accept B

accept A, reject B

accept neither A nor B