Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent and the maximum allowable payback is four years. Time: 1 2 3 4 5 Cash flow: -1,00e -75 100 100 2,000 Multiple Cholce 4.4375 years, reject 4.78 years, accept 3.4375 years, accept 3.78 years, reject
Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent and the maximum allowable payback is four years. Time: 1 2 3 4 5 Cash flow: -1,00e -75 100 100 2,000 Multiple Cholce 4.4375 years, reject 4.78 years, accept 3.4375 years, accept 3.78 years, reject
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent and the maximum allowable payback is four years.
| Time | 0 | 1 | 2 | 3 | 4 | 5 |
|-------|-------|-------|-----|-----|-----|------|
| Cash Flow | -1,000 | -75 | 100 | 100 | 0 | 2,000 |
**Multiple Choice:**
1. 4.4375 years, reject
2. 4.78 years, accept
3. 3.4375 years, accept
4. 3.78 years, reject
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