Suppose your firm is considering investing in a project wiht the cash flows shown as follows; that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years, respectively.
TIME CASH FLOWS
0 -125,000
1 65,000
2 78,000
3 105,000
4 105,000
5 25,000
- Calculate the NPV and use the NPV rule to evaluate this project; should it be accepted or rejected and why?