Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives. 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.

Question

Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives.  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.

Quizplus · Accepted Answer

The Answer of Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives.  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.

Matt Is Analyzing Two Mutually Exclusive Projects of Similar Size