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 NPV decision to evaluate this project; should it be accepted or rejected?
A) NPV = $1,766.55; accept the project
B) NPV = $892.19; accept the project
C) NPV = $1,288.94; accept the project
D) NPV = −$104.73; reject the project

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 NPV decision to evaluate this project; should it be accepted or rejected? 
A) NPV = $1,766.55; accept the project 
B) NPV = $892.19; accept the project 
C) NPV = $1,288.94; accept the project 
D) NPV = −$104.73; reject the project

Quizplus · Accepted Answer

Using a financial calculator: NPV = 1,766.55; accept since NPV > 0

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