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An independent capital budgeting project is expected to have the following cash flows. Year Cash flows 0 -$500,000 1 $100,000 2 $150,000 4 $250,000 5
An independent capital budgeting project is expected to have the following cash flows.
| Year | Cash flows |
| 0 | -$500,000 |
| 1 | $100,000 |
| 2 | $150,000 |
| 4 | $250,000 |
| 5 | $300,000 |
a. Compute the payback period b. Compute the discounted payback period using an 11 percent required rate of return. c. Should the project be accepted?
| A. a. 2 years b. 2.53 years c. Yes | |
| B. a. 3 years b. 3.53 years c. Yes | |
| C. a. 2 years b. 2.53 years c. No | |
| D. a. 3 years b. 3.53 years c. No |
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