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 3.5 and 4.5 years, respectively. 0 1 2 3 4 5 6 Time: Cash flow: -$5,000 $1,200 $2,400 $1,600 $1,600 $1,400 $1,200 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Discounted payback Should it be accepted or rejected? O accepted O rejected 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 8 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
-$5,000 $1,200 $2,400 $1,600 $1,600 $1,400
Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations. Round your answer to 2
decimal places.)
Discounted payback
Should it be accepted or rejected?
O accepted
O rejected
6
$1,200
years
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 3.5 and 4.5 years, respectively. Time: Cash flow: 0 1 2 3 4 5 -$5,000 $1,200 $2,400 $1,600 $1,600 $1,400 Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Discounted payback Should it be accepted or rejected? O accepted O rejected 6 $1,200 years
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