Suppose your firm is considering investing in a project with the cash flows shown below, that the requi this risk class is 7 percent, and that the maximum allowable payback and discounted payback statistics years, respectively. Time: Cash flow: 0 1 2 3 4 5 -$5,100 $1,240 $2,440 $1,640 $1,640 $1,440 Discounted payback Use the discounted payback decision rule to evaluate this project. (Round your answer to 2 decimal p 6 $1,240 years

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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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 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5
years, respectively.
Time:
Cash flow:
0
1
2
3
4
-$5,100 $1,240 $2,440 $1,640 $1,640
Discounted payback
Use the discounted payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
Should it be accepted or rejected?
5
$1,440
years
6
$1,240
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 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: Cash flow: 0 1 2 3 4 -$5,100 $1,240 $2,440 $1,640 $1,640 Discounted payback Use the discounted payback decision rule to evaluate this project. (Round your answer to 2 decimal places.) Should it be accepted or rejected? 5 $1,440 years 6 $1,240
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