The new financial analyst does not like the paybak approach in - 35091 - and determines that the firm's required rate of return is 15 %. His recommendation would be to _________
accept projects A & B, accept project A & reject B, reject A & accept B, or reject both
The following is the case - 35091 -
A firm is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows:
Project "A" - Initial Investment = $40,000 & End-of-Year Cash Flows = $60,000
Project "B" - Initial Investment = $90,000 & End-of-Year Cash Flows = $160,000
If the firm above has a required payback of two (2) years, they shold _____.
accept projects A & B, accept project A & reject B, reject project A & accept B, or reject both
please advise answer & reflect why - thanks!© BrainMass Inc. brainmass.com March 4, 2021, 6:13 pm ad1c9bdddf
Rate of return: Project A = (60000-40000)/40000=50% >15%
Rate of ...