J&J Enterprises Is Considering an Investment That Will Cost $318,000

question 81

Multiple Choice

J&J Enterprises is considering an investment that will cost $318,000.The investment produces no cash flows for the first year.In the second year,the cash inflow is $47,000.This inflow will increase to $198,000 and then $226,000 for the following two years,respectively,before ceasing permanently.The firm requires a 15.5 percent rate of return and has a required discounted payback period of three years.Should the project be accepted? Why or why not?

• A)accept; The discounted payback period is 2.18 years.
• B)accept; The discounted payback period is 2.32 years.
• C)accept; The discounted payback period is 2.98 years.
• D)reject; The discounted payback period is 2.18 years.
• E)reject; The project never pays back on a discounted basis.

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