Valley Products, Inc. is considering two independent investments having the following cash flow streams:

Details

An account shows the following information of Year, Project A and Project B. 0 $50,000 and $40,000 1 +20,000 and +20,000 2 +20,000 and +10,000 3 +10,000 and +5,000 4 +5,000 and +5,000 5 +5,000 and +40,000

Valley uses a combination of the net present value approach and the payback approach to evaluate investment alternatives. It requires that all projects have a positive net present value when cash flows are discounted at 10 percent and that all projects have a payback no longer than three years. Which project or projects should the firm accept? Why?