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    NPV

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    43. Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives.
    Project A Project B
    NPV $15.090 $14,693
    Payback period 2.76 years 2.51 years
    Required return 8.3% 8.0%
    Matt has been asked for his best recommendation given this information. His recommendation should be to accept:
    A. project B because it has the shortest payback period.
    B. both projects as they both have positive net present values.
    C. project A and reject project B based on their net present values.
    D. project B and reject project A based on other criteria not mentioned in the problem.
    E. project B and reject project A based on both the payback period and the average accounting return.

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    Solution Preview

    43. Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives.
    Project A ...

    Solution Summary

    NPV is assessed.

    $2.19