Not secure | ezto.mheducation.com/hm.tpx connect. Cornett, M: Finance FINANCE te

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Not secure | ezto.mheducation.com/hm.tpx connect. Cornett, M: Finance FINANCE ter 13 Homework Question 1 (of 3) value 10.00 points 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 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively Time: Cash flow 012 34 5 6 -$4,800 $1.210 $2.410 $1,610 $1,530 $1,410 $1,210 Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.) Payback Should it be accepted or rejected? years Accepted O Rejected Hints Reterences eBook & Resources Hint#1

Explanation / Answer

Answer:

Payback period = 2.73 years.

Calculate cumulative cash flow and find when the initial outlay is recovered.

Discounted Payback Period = 3.2 years. @7%

Project must be accepted in the given scenario.

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