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 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.5 and 3.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: -$ 4,600 $ 1,120 $2,320 $ 1,520 $ 1,520 $ 1,320 $ 1,120 Use the payback decision rule to evaluate this project. Note: Round your answer to 2 decimal places. Payback years Should it be accepted or rejected? (Click to select) ✓

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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Vijay shiyal 

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 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.5 and 3.5
years, respectively.
Time:
0
1
2
3
4
5
Cash flow: -$4,600 $ 1,120 $2,320 $1,520 $ 1,520 $ 1,320 $ 1,120
Use the payback decision rule to evaluate this project.
Note: Round your answer to 2 decimal places.
Payback
years
Should it be accepted or rejected?
(Click to select) ✓
Transcribed Image Text: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 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.5 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -$4,600 $ 1,120 $2,320 $1,520 $ 1,520 $ 1,320 $ 1,120 Use the payback decision rule to evaluate this project. Note: Round your answer to 2 decimal places. Payback years Should it be accepted or rejected? (Click to select) ✓
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