Discounted payback = 4.25 years; accept the project Discounted payback = 3.50 ye

Question

Discounted payback = 4.25 years; accept the project Discounted payback = 3.50 years; accept the project Discounted payback > 5 years; reject the project Discounted payback = 4.67 years; reject the project 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 10 percent, and that the maxi mu m allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Use the discounted payback decision to evaluate this project; should it be accepted or rejected?

Explanation / Answer

Discounted payback = 4.67 years; reject the project

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