Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3 and 3.5 years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected?
A) Payback = 4.90 years; reject
B) Payback = 4.40 years; reject
C) Payback = 5.80 years; reject
D) Payback 6.00 years; reject

Question

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3 and 3.5 years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected? 
A) Payback = 4.90 years; reject 
B) Payback = 4.40 years; reject 
C) Payback = 5.80 years; reject 
D) Payback > 6.00 years; reject

Quizplus · Accepted Answer

The Answer of Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3 and 3.5 years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected? 
A) Payback = 4.90 years; reject 
B) Payback = 4.40 years; reject 
C) Payback = 5.80 years; reject 
D) Payback > 6.00 years; reject

Suppose Your Firm Is Considering Investing in a Project with the Cash