Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -S 245,000 $ 66,800 $ 85,000 $ 142,000 $ 123,000 $ 82, 200 Use the Pl decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Should it be accepted or rejected? (Click to select)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 20P
Question

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: 0 1 2 3 4 5 Cash flow: -S 245,000 $ 66,800 $ 85,000 $ 142,000 $ 123,000 $ 82, 200 Use the Pl decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Should it be accepted or rejected? (Click to select)

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