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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
Time 0 1 2 3 4 5 6 Cash Flow -1,120 60 540 740 740 340 740
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
2.65 years, accept
3.35 years, reject
3.53 years, reject
2.57 years, accept
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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
| Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Cash Flow | -1,120 | 60 | 540 | 740 | 740 | 340 | 740 |
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
2.65 years, accept
3.35 years, reject
3.53 years, reject
2.57 years, accept
Related questions
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 10 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
| Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Cash Flow | -1,050 | 150 | 450 | 650 | 650 | 250 | 650 |
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
3.14 years, reject
3.12 years, reject
2.80 years, accept
2.88 years, accept
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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
| time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| cash flow | -1170 | 0 | 590 | 790 | 790 | 390 | 77 |
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
2.55 years, accept A
2.63 years, accept B
3.59 years, reject C
3.37 years, reject D
