Question
Consider an investment that costs $250,000 (CF0) and has a cash inflow of $40,000 every year for 7 years, and $40,045 inflow in Year 8
Consider an investment that costs $250,000 (CF0) and has a cash inflow of $40,000 every year for 7 years, and $40,045 inflow in Year 8 (see table). All accepted projects must earn a minimum return of 5.84% (R), and payback it's initial project cost within 6 years. Year Cash Flow 2020 $ (250,000) 2021 $ 40,000 2022 $ 40,000 2023 $ 40,000 2024 $ 40,000 2025 $ 40,000 2026 $ 40,000 2027 $ 40,000 2028 $ 40,045 Should management accept this project based upon its payback criteria? Group of answer choices payback is less than 6 years, accept project payback is greater than 6 years, reject project
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