Question
Project A has the following cashflows: 0 1 2 3 4 -$600 +100 +200 +300 +400 The CEO wants to apply the payback rule to
Project A has the following cashflows:
| 0 | 1 | 2 | 3 | 4 |
| -$600 | +100 | +200 | +300 | +400 |
The CEO wants to apply the payback rule to evaluate the projects. She decides a cutoff period of 2 years. What is the payback period of the project, and should the company accept it?
| a. | Payback period = 2 years. Do not accept. | |
| b. | Payback period = 3 years. Do not accept. | |
| c. | Payback period = 2 years. Accept. | |
| d. | Payback period = 3 years. Accept. |
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Take The Trade A Floor Trade
Authors: Tony Wilson
1st Edition
979-8218195458
