Tim Is Considering Two Projects, Both of Which Have an Initial

True/False

Tim is considering two projects, both of which have an initial cost of $12,000 and total cash inflows
of $15,000. The cash inflows of project A are $1,000, $2,000, $4,000, and $8,000 over the next
four years, respectively. The cash inflows for project B are $8,000, $4,000, $2,000 and $1,000 over
the next four years, respectively. Which one of the following statements is correct if Tim requires a
10 percent rate of return and has a required discounted payback period of 3 years? Given this
information, Tim should accept project A because it has a payback period of 2.65 years.