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 9 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 -880 180 460 660 660 260 660
Use the PI decision rule to evaluate this project; should it be accepted or rejected?
1.37%, reject
137.73%, accept
-137.00%, reject
1.37%, accept