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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
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 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.
Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cash Flow | -$5,100 | $1,240 | $2,440 | $1,640 | $1,560 | $1,440 | $1,240 |
Use the payback decision rule to evaluate this project. Please do not round intermediate calculations or final answer.
Payback in Years?
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