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Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

5th Edition

ISBN:9781305084766

Author:Saeed Moaveni

Publisher:Saeed Moaveni

Chapter20: Engineering Economics

Section: Chapter Questions

Problem 46P

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Question

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 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are
2.5 and 3.0 years, respectively.
Time:
Cash flow:
0
1
2
3
-$227,000
$65,000
$83,200
$140,200
4
$121,200
5
$80,400
Use the payback decision rule to evaluate this project.
Note: Round your answer to 2 decimal places.
Payback
years

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