Compute the Discounted Payback Statistic for Project X and Recommend

question 58

Multiple Choice

Compute the discounted payback statistic for Project X 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 10 percent and the maximum allowable discounted payback is three years.
$$\begin{array}{l}\begin{array} {| l | l | l | l | l | l | l |}\hline\text {Time: }&0&1&2&3&4&5\\\hline\text {Cash flow:}&-1,000&500&480&400&300&150\\\hline\end{array}\end{array}$$

• A) 2.49 years, accept
• B) 2.98 years, accept
• C) 3.49 years, reject
• D) 4.98 years, reject

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Definitions:

DSM-IV-TR

Stands for Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a manual published by the American Psychiatric Association that outlines diagnostic criteria for mental disorders.

Symptoms

Signs or manifestations of a condition or disease observed by a patient, often indicating the presence of an underlying health issue.

Specific Criteria

A defined set of guidelines or characteristics used to classify or diagnose conditions and disorders accurately.

Psychodynamic Model

A psychological perspective that emphasizes unconscious psychological processes (e.g., wishes and fears of which we're not fully aware), and contends that childhood experiences are crucial in shaping adult personality.