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Pi decision rule to evaluate projects

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Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Use the PI decision rule to evaluate these projects; which one(s) should it be accepted or rejected?

Time: 0 1 2 3

Project A Cash Flow: -26,000 16,000 36,000 7,000

Project B Cash Flow: -36,000 16,000 26,000 56,000

Reference no: EM132554734

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