Payback. A project that costs $2,500 to install will provide annual cash flows of $600 for the

Question:

Payback. A project that costs $2,500 to install will provide annual cash flows of $600 for the next 6 years. The firm accepts projects with payback periods of less than 5 years. Will the project be accepted? Should this project be pursued if the discount rate is 2 percent?

What if the discount rate is 12 percent? Will the firm’s decision change as the discount rate changes?

Fantastic news! We've Found the answer you've been seeking!