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 statistics for the project are 3.5 and 4.5 years, respectively.
|
|
|
|
|
|
|
| Time: |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
| Cash flow |
-$5,100 |
$1,280 |
$2,480 |
$1,680 |
$1,680 |
$1,480 |
$1,280 |
|
Use the PI decision rule to evaluate this project. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
PI
Should it be accepted or rejected?
Accepted
Rejected