You Are Considering the Following Two Mutually Exclusive Projects Based Upon the Internal Rate of Return (IRR) and the Projects

Multiple Choice

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 proiect has any salvaqe value.
$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Year } & \text { Project A } & \text { Project B } \\\hline 0 & - £ 75,000 & - £ 70,000 \\\hline 1 & £ 19,000 & £ 10,000 \\\hline 2 & £ 48,000 & £ 16,000 \\\hline 3 & £ 12,000 & £ 72,000 \\\hline\end{array}\\\begin{array} { | l | l | l | } \hline & \text { Project A } & \text { Project B } \\\hline \text { Required rate of return } & 10 \% & 13 \% \\\hline \text { Required payback period } & 2.0 \text { years } & 2.0 \text { years } \\\hline \text { Required accounting return } & 8 \% & 11 \% \\\hline\end{array}\end{array}$
Based upon the internal rate of return (IRR) 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) ignore the IRR rule and use another method of analysis.