Compute the Payback Statistic for Project Y and Recommend Whether

question 20

Multiple Choice

Compute the payback statistic for Project Y and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 11 percent and the maximum allowable payback is one year.
$$\begin{array}{l}\begin{array} {| l | l | l | l | l | l | l |}\hline\text {Time: }&0&1&2&3&4&5\\\hline\text {Cash flow:}&-100&75&100&300&75&200\\\hline\end{array}\end{array}$$

• A) 1.25 years, reject
• B) 1.25 years, accept
• C) 1.33 years, accept
• D) 2.25 years, accept

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Definitions:

Adrenal Cortex

The outer portion of the adrenal gland responsible for producing steroid hormones, including cortisol and aldosterone, which regulate metabolism and stress.

Acetylcholine

A neurotransmitter involved in many functions including muscle movement, heart rate, memory, and learning.

Muscle Contractions

The process whereby muscle fibers shorten or lengthen to produce movement or maintain posture as a response to stimulation by nerve impulses.

Dependent Variable

The variable that is being measured in an experiment or study to see if it is affected by changes in another variable.