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Accept or reject these projects based on payback analysis

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You are considering two mutually exclusive projects. Project A has cash flows of -$72,000, $21,400, $22,900, and $56,300 for years 0 to 3, respectively. Project B has cash flows of -$81,000, $20,100, $22,200, and $74,800 for years 0 to 3, respectively. Both projects have a required 2.5-year payback period. Should you accept or reject these projects based on payback analysis?

A) Accept Project A and reject Project B.

B) Reject Project A and accept Project B.

C) Accept both Projects A and B.

D) Reject both Projects A and B.

E) You should not use payback; use another method of analysis.

Reference no: EM13879581

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