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

---

Definitions:

Attitude Change

Attitude change involves a shift in a person's feelings, beliefs, or positions regarding an idea, object, or person, often as a result of persuasion, new information, or personal reflection.

Persuasion

The act of influencing someone’s beliefs, attitudes, intentions, motivations, or behaviors through argument, reasoning, or plea.

Behavior

The actions or reactions of a person or animal in response to external or internal stimuli.

Globalization

The process involving the integration and interdependence of national economies, cultures, and populations brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.