Question
Tony Vs has invested $6,497,400 on equipment and anticipates cash flows of $1,273,158, $1,536,534, $1,685,265, $2,294,991, $2,449,500, and $2,476,125 over the next six years. Assume
Tony Vs has invested $6,497,400 on equipment and anticipates cash flows of $1,273,158, $1,536,534, $1,685,265, $2,294,991, $2,449,500, and $2,476,125 over the next six years. Assume that the discount rate is 10 percent. What is the discounted payback period for the project? The firm uses payback period criteria of not accepting any project that takes more than four years and 9 months to recover costs. The company. and should the firm buy the equipment based on the firm's payback criteria?
A. 3.87 years, accept
B. 3.87 years, reject
C. 4.81 years, reject
D. Cannot compute discounted payback period
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