Ginny Trueblood is considering an investment which will cost her £120,000.The investment produces no cash ﬂows for the ﬁrst year.In the second year the cash inﬂow is £35,000.This inﬂow
Will increase to £55,000 and then £75,000 for the following two years before ceasing permanently.
Ginny requires a 10% rate of return and has a required discounted payback period of three years.
Ginny should _____ this project because the discounted payback period is _____.
A)accept; 2.03 years
B)accept; 2.97 years
C)accept; 3.97 years
D)reject; 3.03 years
E)reject; 3.97 years

Question

Quizplus · Accepted Answer

The discounted payback period exceeds Ginny's required period of three years, making the project unacceptable.

Ginny Trueblood Is Considering an Investment Which Will Cost Her