Compute the Discounted Payback Statistic for Project Y and Recommend

question 57

Multiple Choice

Compute the Discounted Payback statistic for Project Y and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent and the maximum allowable discounted payback is 3 years.

• A) 3.45 years, reject
• B) 3.86 years, reject
• C) 3.45 years, accept
• D) 3.86 years, accept

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Definitions:

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Units of time measuring 365 or 366 days, used as a standard time period for comparing durations.

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Units of time corresponding approximately to one cycle of the moon's phases, used in planning and organizing activities over a period, typically consisting of 30 or 31 days, except for February.

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