Question
ABC Inc. is looking at investing in a 3-year project that will create cash inflows of $7,000 in the first year, $8,000 in the second
ABC Inc. is looking at investing in a 3-year project that will create cash inflows of $7,000 in the first year, $8,000 in the second year, and $9,000 in the third year. The cost of this project is $18,000, and the required return is 12%. Using the discounted payback period rule and a cutoff point of 2.5 years, should the company invest in this project?
Multiple Choice
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Yes, ABC should invest in this project because the discounted payback is approximately 2.6 years.
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Yes, ABC should invest in this project because the discounted payback is greater than 3 years.
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No, ABC should reject this project because the discounted payback is approximately 2.3 years.
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Yes, ABC should invest this project because the discounted payback is approximately 2.8 years
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No, ABC should reject this project because the discounted payback is approximately 2.8 years
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Human Resource Management
Authors: Robert L. Mathis, John H. Jackson
13th Edition
053845315X, 978-0538453158
