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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 of
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. Use the payback decision to evaluate this project; should it be accepted or rejected? What is the payback period? Time 0, 1,2,3, 4, 5, 6 Cash flow: -5,000, 1,300, 1,400, 1,600, 1,600, 1,100, 2,000
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