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    Project Choices

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    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
    https://brainmass.com/business/project-management/project-choices-35092

    Solution Preview

    Rate of return: Project A = (60000-40000)/40000=50% >15%
    Rate of ...

    $2.49

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