Problem

Intro

You are evaluating an investment project costing $$11,900$ initially. The project will provide $$3,000$ in after$-$tax cash

flows in the first year and $$5,000$ each year thereafter for $4$ years. The maximum payback period for your company

is $3$ years.

Your company's cost of capital is $15\%.$

Part $1$

What is the discounted payback period for this project?

Part $2$

Should your company accept this project based on the discounted payback period criterion?

No

Yes