Solve for problem
below and show your work.
A company has the
following mutually exclusive projects.
Year Project
A Project
B
0
-$15,300
-$10,700
1
8,700
5,300
2
7,400
4,300
3
3,100
4,800
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a. Suppose the
company's payback cutoff is two years. Which of these two projects
should be chosen?
b. Suppose the company
uses the NPV rule to rank these two projects. Which projects should
be chosen if the appropriate discount rate is 15 percent?