Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects ofthis risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and3.5 years, respectively.Time:1245Cash flow-$244,000$66,700$84,900$141,900$122,900$82,100Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your finalanswer to 2 decimal places.)Discounted paybackyearsShould it be accepted or rejected?

Payback Period: It is the period in which the project of the company recovers the cash outflow (cost…

Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Discounted payback years Should it be accepted or rejected?

Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Discounted payback years Should it be accepted or rejected?

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

Section: Chapter Questions

Problem 1PS

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Concept explainers

Employer Pension Plan

An employer pension plan is a retirement benefit provided by an employer to employees before or after they retire. Over the course of the employees' working lives, the employer should invest a lump sum or make monthly contributions to investment schemes in employees' names. It is the employer's legal responsibility to provide employees with retirement plans that support them with guaranteed financial security in retirement.

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 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and
3.5 years, respectively.
Time:
1
2
4
5
Cash flow
-$244,000
$66,700
$84,900
$141,900
$122,900
$82,100
Use the discounted payback decision rule to evaluate this project. (Do not round intermediate calculations and round your final
answer to 2 decimal places.)
Discounted payback
years
Should it be accepted or rejected?

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