Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 14 percent and the maximum allowable discounted payback is 3 years. Time: Cash flow: 3.46 years, reject 2.46 years, accept O2.85 years, accept O 4.85 years, reject 0 -960 1 360 2 620 3 4 540 440 5 290

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 14P
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Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the
cash flows shown below if the appropriate cost of capital is 14 percent and the maximum allowable discounted payback is 3 years.
Time:
Cash flow:
3.46 years, reject
2.46 years, accept
O2.85 years, accept
O 4.85 years, reject
0
-960
1
360
2
620
3
4
540
440
5
290
Transcribed Image Text:Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 14 percent and the maximum allowable discounted payback is 3 years. Time: Cash flow: 3.46 years, reject 2.46 years, accept O2.85 years, accept O 4.85 years, reject 0 -960 1 360 2 620 3 4 540 440 5 290
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