Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected?

A)Payback = 4.44 years; reject
B)Payback = 3.44 years; accept
C)Payback = 3.54 years; reject
D)Payback = 3.24 years; reject

Question

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected?

A)Payback = 4.44 years; reject 
B)Payback = 3.44 years; accept 
C)Payback = 3.54 years; reject 
D)Payback = 3.24 years; reject

Quizplus · Accepted Answer

The Answer of Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the payback decision to evaluate this project; should it be accepted or rejected?

A)Payback = 4.44 years; reject 
B)Payback = 3.44 years; accept 
C)Payback = 3.54 years; reject 
D)Payback = 3.24 years; reject

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