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

question 52

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 statistics for the project are three and a half and four and a half years,respectively.Use the payback decision to evaluate this project; should it be accepted or rejected?

• A) Payback = 4.44 years; reject
• B) Payback = 3.44 years; accept
• C) Payback = 3.54 years; reject
• D) Payback = 3.24 years; reject

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