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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 7 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 –$5,000 $1,270 $2,470 $1,670 $1,590 $1,470 $1,270

Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)

Payback years

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93045319

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