Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.
Time: 0 1 2 3
Project A Cash Flow -26,000 16,000 36,000 7,000
Project B Cash Flow -36,000 16,000 26,000 56,000
Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected?