Samuelson Electronics has a required payback period of three years for all of its projects.

Samuelson Electronics has a required payback period of three years for all of its projects. Currently, the firm is analyzing two independent projects. Project A has an expected payback period of 2.8 years and a net present value of $6,800. Project B has an expected payback period of 3.1 years with a net present value of $28,400. Which projects should be accepted based on the payback decision rule?    A.  Project A only B.  Project B only C.  Both A and B D.  Neither A nor B E.  Answer cannot be determined based on the information given. Refer to section 9.2

22.

A project has a required payback period of three years. Which one of the following statements is correct concerning the payback analysis of this project?    A.  The cash flows in each of the three years must exceed one-third of the project's initial cost if the project is to be accepted. B.  The cash flow in year three is ignored. C.  The project's cash flow in year three is discounted by a factor of (1 + R)3. D.  The cash flow in year two is valued just as highly as the cash flow in year one. E.  The project is acceptable whenever the payback period exceeds three years. Refer to section 9.2

23.

A project has a discounted payback period that is equal to the required payback period. Given this, which of the following statements must be true? I. The project must also be acceptable under the payback rule. II. The project must have a profitability index that is equal to or greater than 1.0. III. The project must have a zero net present value. IV. The project's internal rate of return must equal the required return.    A.  I only B.  I and II only C.  II and III only D.  I, III, and IV only E.  I, II, III, and IV Refer to section 9.3

24.

Which one of the following statements related to payback and discounted payback is correct?    A.  Payback is a better method of analysis than is discounted payback. B.  Discounted payback is used more frequently in business than is payback. C.  Discounted payback does not require a cutoff point like the payback method does. D.  Discounted payback is biased towards long-term projects while payback is biased towards short-term projects. E.  Payback is used more frequently even though discounted payback is a better method. Refer to sections 9.2 and 9.3