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Crawford Enterprises is considering a five year project. Cash flows are expected to be as follows: Year Cash flow 0 - 10,000 5,000 1 2
Crawford Enterprises is considering a five year project. Cash flows are expected to be as follows: Year Cash flow 0 - 10,000 5,000 1 2 4,000 3 4,000 2,000 5 2,000 Management's payback target is 3 years. The appropriate discount rate for the project is 10%. Use the above information to answer the following: What is the payback period of the project? Should the company accept or reject the project based on the payback decision rule? Please show all of your work. B I VA D 2 HTML A - TEE 11 x , EE V , DT: 12pt 19:28 NPV = -10,000 + 5000/1.10+4000/1.10^2+4000/1.10^3+2000/1.10^4+2000/1.10^5 NPV = 3464.37
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