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 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. Time: 1 2 3 4 5 Cash flow: $65,600 $83,800 $140,800 $121,800 $81,000 $233,000 Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.) Payback 1.19 years Should the project be accepted or rejected? О ассepted O rejected

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 20P
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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
11 percent, and that the maximum allowable payback and discounted
payback statistics for your company are 2.5 and 3.0 years, respectively.
19
ts
Time:
2
3
4
5
Cash flow:
$65,600 $83, 800 $140,800 $121,800 $81,000
$233,000
Print
Use the payback decision rule to evaluate this project. (Round your
answer to 2 decimal places.)
-ferences
Payback
1.19 years
Should the project be accepted or rejected?
О ассepted
O rejected
Transcribed Image Text: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 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively. 19 ts Time: 2 3 4 5 Cash flow: $65,600 $83, 800 $140,800 $121,800 $81,000 $233,000 Print Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.) -ferences Payback 1.19 years Should the project be accepted or rejected? О ассepted O rejected
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