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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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