Cooper Woodworking is considering two projects, both of which have an initial co
ID: 2704544 • Letter: C
Question
Cooper Woodworking is considering two projects, both of which have an initial cost of $65,000 and total cash inflows of $80,000. The cash inflows of project A are $10,000, $15,000, $25,000, and $30,000 over the next four years, respectively. The cash inflows for project B are $30,000, $25,000, $15,000, and $10,000 over the next four years, respectively. Which one of the following statements is correct if Cooper requires an 11.5 percent rate of return and also has a required payback period of 4 years?
A. Both projects should be accepted.
B. Both projects should be rejected.
C. Project A should be accepted and project B should be rejected.
D. Project A should be rejected and project B should be accepted.
Cooper Woodworking is considering two projects, both of which have an initial cost of $65,000 and total cash inflows of $80,000. The cash inflows of project A are $10,000, $15,000, $25,000, and $30,000 over the next four years, respectively. The cash inflows for project B are $30,000, $25,000, $15,000, and $10,000 over the next four years, respectively. Which one of the following statements is correct if Cooper requires an 11.5 percent rate of return and also has a required payback period of 4 years? Both projects should be accepted. Both projects should be rejected. Project A should be accepted and project B should be rejected. Project A should be rejected and project B should be accepted. You should be indifferent to accepting either or both projects.Explanation / Answer
C. Project A should be accepted and project B should be rejected.