TB MC Qu. 13-51 Suppose your firm is considering two...

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown as follows. The required rate of return on projects of both of their risk class is 10 percent, and the maximum allowable payback and discounted payback statistic for the projects are two and a half and three and a half years, respectively.

Time	0	1	2	3
Project A Cash Flow	1,000	300	400	700
Project B Cash Flow	500	200	400	300

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

Multiple Choice

Accept A, reject B

Accept both A and B

Accept neither A nor B

Reject A, accept B