Compute the 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 8 percent and the maximum allowable payback is 4 years.   Time: 0 1 2 3 4 5   Cash flow: -2,700 850 650 900 825 525 rev: 12_06_2012   Multiple Choice   3.36 years, Reject   2.36 years, Accept   3.36 years, Accept   2.36 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
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Compute the 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 8 percent and the maximum allowable payback is 4 years.

  Time: 0 1 2 3 4 5
  Cash flow: -2,700 850 650 900 825 525

rev: 12_06_2012

 

Multiple Choice

  •  
    3.36 years, Reject
  •  
    2.36 years, Accept
  •  
    3.36 years, Accept
  •  
    2.36 years, Reject
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