Suppose Your Firm Is Considering Investing in a Project with the Cash

question 82

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively. $$\begin{array} { l l l l l l l } \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000\end{array}$$ Use the payback decision rule to evaluate this project; should it be accepted or rejected?

• A)2.45 years, accept
• B)2.83 years, accept
• C)3.45 years, accept
• D)3.83 years, reject

---

Definitions:

Trespass

An unlawful act of entering someone's land or property without permission, which can also extend to interference with a person's rights or possessions.

Eavestrough Downspout

A vertical pipe that channels rainwater from a roof's gutter system away from the building's foundation.

Flooding Basement

The condition where water accumulates in a basement, typically due to heavy rain or leaks.

Defamatory Statements

Statements that are false and injurious to the reputation of another person or entity.