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. $$\begin{array} { l l l } & \frac { \text { Project } \mathrm { A } } { } & \frac { \text { Project B } } { } \\\text { Net present value } & \$ 15,090 & \$ 14,693 \\\text { Payback period } & 2.76 \text { years } & 2.51 \text { years } \\\text { Required return } & 8.3 \% & 8.0 \%\end{array}$$ 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 other criteria not mentioned in the problem.
E) project B and reject project A based on both the payback period and the average accounting return.