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 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Show your work or decision process for each of methods.
Time
0
1
2
3
4
5
Cash Flow
-$235,000
$65,800
$84,000
$141,000
$122,000
$81,200
Use the payback decision rule to evaluate this project; should it be accepted or rejected?
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
Use the IRR decision rule to evaluate this project; should it be accepted or rejected?
Use the MIRR decision rule to evaluate this project; should it be accepted or rejected?
Use the NPV decision rule to evaluate this project; should it be accepted or rejected?
Use the PI decision rule to evaluate this project; should it be accepted or rejected?
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 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively. Show your work or decision process for each of methods.
| Time | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash Flow | -$235,000 | $65,800 | $84,000 | $141,000 | $122,000 | $81,200 |
Use the payback decision rule to evaluate this project; should it be accepted or rejected?
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
Use the IRR decision rule to evaluate this project; should it be accepted or rejected?
Use the MIRR decision rule to evaluate this project; should it be accepted or rejected?
Use the NPV decision rule to evaluate this project; should it be accepted or rejected?
Use the PI decision rule to evaluate this project; should it be accepted or rejected?
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
