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You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight - line depreciation to a zero book value over

You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project.
Neither project has any salvage value. Based upon the discounted payback period and the information provided in the problem, you should:
Project A Project B
Year Cash flow Cash flow
0-75,000-70,000
119,00010,000
248,00016,000
312,00072,000
Required rate of return 10%13%
Required payback period 2.0 years 2.0 years
Required AAR 8%11%
A. accept both project A and project B.
B. reject both project A and project B.
C. accept project A and reject project B.

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