(d) Now suppose that your discount rate is 5% per year for both projects. If projects A and B are mutually exclusive which project will you accept, if any? (e) Calculate Payback Period for project A and Payback Period for project B. (f) Suppose that the payback cutoff for both projects is 3.5 years, which project (if any) should be accepted using payback periods rule? (Disregard NPV and IRR rules in answering this question)

(d) Now suppose that your discount rate is 5% per year for both projects. If projects A and B are mutually exclusive which project will you accept, if any? (e) Calculate Payback Period for project A and Payback Period for project B. (f) Suppose that the payback cutoff for both projects is 3.5 years, which project (if any) should be accepted using payback periods rule? (Disregard NPV and IRR rules in answering this question)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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