Compute the Discounted Payback Statistic for Project Y and Recommend

question 101

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 as follows if the appropriate cost of capital is 12 percent and the maximum allowable discounted payback is three years. $$\begin{array} { l l l l l l l } \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash flow: } & - 5000 & 500 & 2000 & 3000 & 1500 & 500\end{array}$$

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

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