TB MC Qu. 13-43 Suppose your firm is considering investing...

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 statistic for the project are three and three and a half years, respectively.

Time	0	1	2	3	4	5
Cash Flow	100,000	30,000	45,000	55,000	30,000	10,000

Use the PI decision rule to evaluate this project; should it be accepted or rejected?

Multiple Choice

0.39 percent, accept

38.88 percent, reject

0.39 percent, reject

38.88 percent, accept