The following table presents information on a potential project currently being evaluated by XYZ. Which assertion about statement 1 and statement 2 is true?

Expected cash flows (number of years from today) Cost of capital

0 1 2 3 4

-$82,000.00 $38,000.00 $20,000.00 $31,000.00 $7,000.00 12.13%

Statement 1: XYZ would accept the project based on the project's net present value and the NPV rule.

Statement 2: XYZ would accept the project based on the project's payback period and the payback rule if the payback threshold is 3.75 years .

Chocies:

Statement 1 is true and statement 2 is true

Statement 1 is true and statement 2 is false

Statement 1 is false and statement 2 is true

Statement 1 is false and statement 2 is false