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 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are 2.5 and 3.0 years, respectively.
Time: 0 1 2 3 4 5 Cash flow –$229,000 $65,200 $83,400 $140,400 $121,400 $80,600 Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
Payback in years = ?
Payback years Should the project be accepted or rejected? Accepted Rejected