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 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are 3 and 3.5 years, respectively. Use the payback decision rule to evaluate this project; should it be accepted or reject
Time 0 1 2 3 4 5
Cash Flow -1000 500 480 400 300 150
Select one:
a. 2.45 years, accept
b. 2.83 years, accept
c. 3.45 years, accept
d. 3.83 years, reject
Note: Can you please show me how you calculated it all? I followed along to a YouTube video, but my answer wasn't in the options, so I know I did it wrong. I tried to do it in Excel. Thank you!
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 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are 3 and 3.5 years, respectively. Use the payback decision rule to evaluate this project; should it be accepted or reject
Time 0 1 2 3 4 5
Cash Flow -1000 500 480 400 300 150
Select one:
a. 2.45 years, accept
b. 2.83 years, accept
c. 3.45 years, accept
d. 3.83 years, reject
Note: Can you please show me how you calculated it all? I followed along to a YouTube video, but my answer wasn't in the options, so I know I did it wrong. I tried to do it in Excel. Thank you!
Related questions
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 statistic for the project are 2 and 3 years, respectively.
| Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Cash Flow | -1,050 | 150 | 450 | 650 | 650 | 250 | 650 |
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
3.14 years, reject
3.12 years, reject
2.80 years, accept
2.88 years, accept
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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
| Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Cash Flow | -1,120 | 60 | 540 | 740 | 740 | 340 | 740 |
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
2.65 years, accept
3.35 years, reject
3.53 years, reject
2.57 years, accept
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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.
| time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| cash flow | -1170 | 0 | 590 | 790 | 790 | 390 | 77 |
Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?
2.55 years, accept A
2.63 years, accept B
3.59 years, reject C
3.37 years, reject D
