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Problem 13-18 Discounted Payback (LG13-2) Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of

Problem 13-18 Discounted Payback (LG13-2)

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.

Time: 0 1 2 3 4 5 6
Cash flow $4,900 $1,260 $2,460 $1,660 $1,660 $1,460 $1,260

Use the discounted payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)

Discounted payback years

Should it be accepted or rejected?

Rejected
Accepted

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