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 two and two and .25 years respectively.
Time Years 0 1 2 3 4 5 6
Cash Flow -150,000 30,000 50,000 45,000 25000 35000 10000
Use the payback decision rule to evaluate this project; should it be accepted or rejected?
5. 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.