Matt Is Analyzing Two Mutually Exclusive Projects of Similar Size

Multiple Choice

Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data.Both projects have 5 year lives. $\begin{array}{|l|l|l|}\hline -& \text { Project } \mathrm{A} & \text { Project } \mathrm{B} \\\hline \text { Net present value } & £ 15,090 & £ 14,693 \\\hline \text { Payback period } & 2.76 \text { years } & 2.51 \text { years } \\\hline \text { Average accounting return } & 9.3 \% & 9.6 \% \\\hline \text { Required return } & 8.3 \% & 8.0 \% \\\hline \text { Required AAR } & 9.0 \% & 9.0 \% \\\hline\end{array}$ Matt has been asked for his best recommendation given this information.His recommendation should be to accept:

A) project B because it has the shortest payback period.
B) both projects as they both have positive net present values.
C) project A and reject project B based on their net present values.
D) project B and reject project A based on their average accounting returns.
E) project B and reject project A based on both the payback period and the average accounting return.