Suppose your firm Is considering investing In a project with the cash flows show

Question

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 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Use the NPV decision rule to evaluate this project. (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your final answer to 2 decimal places.) NPV $ Should it accepted or rejected? Rejected Accepted

Explanation / Answer

NPV at 11% discount rate is

=$360,320- 239,000

=$121,320 and accept the project

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