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 PI decision rule to evaluate this project; should it be accepted or rejected?
a. -.39%, reject
b. .39%, accept
c. -38.88%, reject
d. 38.88%, accept