Question
Valley Products,Inc, is considering two independent investments having the following cash flow streams: Year Project A Project B 0 -$50,000 -$40,000 1 +$20,000 +$20,000 2
Valley Products,Inc, is considering two independent investments having the following cash flow streams: Year Project A Project B 0 -$50,000 -$40,000 1 +$20,000 +$20,000 2 +$20,000 +$10,000 3 +$10,000 +$ 5,000 4 +$ 5,000 +$ 5,000 5 +$ 5,000 +$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? PLEASE EXPLAIN AND SHOW WORK FOR POINTS
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