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An investment project has annual cash inflows of $2,200, $2,420, $1,331, and $5,856.4, for the next four years, respectively. The discount rate is 10 percent.
An investment project has annual cash inflows of $2,200, $2,420, $1,331, and $5,856.4, for the next four years, respectively. The discount rate is 10 percent. What are the payback and discounted payback periods for these cash flows if the initial cost is $9,400? Your cut-off payback period is 4 years. Should you accept the project according to the payback rule? Should you accept it according to the discounted payback rule?
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