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

question 36

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.
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

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