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Target Co. is evaluating a project with initial investment (at year 0) of $220,000 that is expected to produce annual profits of $35,000 for 9
Target Co. is evaluating a project with initial investment (at year 0) of $220,000 that is expected to produce annual profits of $35,000 for 9 years, starting in year 1. The firms cost of capital is 11.00% and their preferred payback period is 7 years or less. Will Target Co. accept or reject the project if they follow the payback rule?
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The payback rule cannot be applied in this case.
Accept.
Not enough information.
Reject.
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