Suppose your firm is considering investing in a project with the cash flows shown below, that the
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Question:
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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
Time
0
1
2
3
4
5
6
Cash Flow
-1,120
60
540
740
740
340
740
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
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