(7) Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years, respectively.

Time Years 01 2 3 4 5

Cash Flow-125,00065,00078,000105,000105,00025,000

Use the NPV decision rule to evaluate this project; should it be accepted or rejected? Calculate the NPV