[Solved] Pecos Power Co. considering a new project

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Pecos Power Co. considering a new project with the following expected cash flows: Year 0 -1.7 million Year 1 830,000 Year 2 480,000 Year 3

Pecos Power Co. considering a new project with the following expected cash flows:

Year 0 -1.7 million

Year 1 830,000

Year 2 480,000

Year 3 390,000

Year 4 620,000

The firm's cost of capital is 7.8% and their maximum cutoff is 3 years. Calculate the discounted payback on this project. State if this project is acceptable and why.

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