Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent and the maximum allowable payback is four years.
A) 3.4375 years, accept
B) 3.78 years, reject
C) 4.4375 years, reject
D) 4.78 years, accept

Question

Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent and the maximum allowable payback is four years. 
A) 3.4375 years, accept 
B) 3.78 years, reject 
C) 4.4375 years, reject 
D) 4.78 years, accept

Quizplus · Accepted Answer

11ea8218_2910_e3f8_bbd8_879c41324faa_TB1326_00 4 + (875/2,000) = 4.4375 years

Compute the Payback Statistic for Project X and Recommend Whether