Acme,Incis Considering a Four-Year Project That Has Initial Outlay or Cost

question 28

Multiple Choice

Acme,Inc.is considering a four-year project that has initial outlay or cost of $100,000.The respective cash inflows for years 1,2,3 and 4 are: $50,000,$40,000,$30,000 and $20,000.Acme uses the discounted payback period method,and has a discount rate of 11.50%.Will Acme accept the project if it's payback period is 37 months?

• A)Yes,because it pays back in less than 37 months.
• B)No,because it pays back in over 37 months.
• C)No,because it pays back in over 38 months.
• D)No,because it pays back in over 40 months.