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 statistic for the project are three and three and a half years, respectively. $$\begin{array} { l l l l l l l }
\text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000
\end{array}$$ Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
A)1.23 years, accept
B)2.45 years, accept
C)2.77 years, accept
D)5.36 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 statistic for the project are three and three and a half years, respectively. $$\begin{array} { l l l l l l l } 
\text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000
\end{array}$$ Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
A)1.23 years, accept
B)2.45 years, accept
C)2.77 years, accept
D)5.36 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 statistic for the project are three and three and a half years, respectively. $$\begin{array} { l l l l l l l } 
\text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000
\end{array}$$ Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
A)1.23 years, accept
B)2.45 years, accept
C)2.77 years, accept
D)5.36 years, reject

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