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. Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects
. Suppose your firm is considering investing in a project with the cash flows shown as follows, 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 three and a half four and a half years, respectively.
Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cashflow | -5000 | 1300 | 1400 | 1600 | 1600 | 1100 | 2000 |
Use the payback decision to evaluate this project; should it be accepted or rejected? What is the payback period? 11. A. What is the firms breakeven point in units? B. Draw a breakeven chart for this firm. FC = 20 P = 2 VC = .80
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