You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the payback period and the information provided in the problem,you should:
A) accept both project A and project B.
B) reject both project A and project B.
C) accept project A and reject project B.
D) accept project B and reject project A.
E) require that management extend the payback period for project A since it has a higher initial cost.

Question

You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.  Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the payback period and the information provided in the problem,you should:
A) accept both project A and project B. 
B) reject both project A and project B. 
C) accept project A and reject project B. 
D) accept project B and reject project A. 
E) require that management extend the payback period for project A since it has a higher initial cost.

Quizplus · Accepted Answer

The Answer of You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.  Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the payback period and the information provided in the problem,you should:
A) accept both project A and project B. 
B) reject both project A and project B. 
C) accept project A and reject project B. 
D) accept project B and reject project A. 
E) require that management extend the payback period for project A since it has a higher initial cost.

You Are Considering the Following Two Mutually Exclusive Projects