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

question 33

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 discounted payback decision rule to evaluate this project; should it be accepted or rejected?

• A) 1.23 years, accept
• B) 2.45 years, accept
• C) 2.77 years, accept
• D) 5.36 years, reject

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Definitions:

Dependent Clause

A group of words that contains a subject and a verb but does not express a complete thought and cannot stand alone as a sentence.

Complex Sentence

A sentence type that contains one independent clause and at least one dependent clause, expressing complicated thoughts with more detail.

Independent Clause

An independent clause is a group of words that contains a subject and a verb and expresses a complete thought, capable of standing alone as a sentence.

Dependent Clause

A group of words with a subject and verb that cannot stand alone as a complete sentence.