Question

Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project C
Time:	0	1	2	3	4	5
Cash flow:	–$1,300	$600	$570	$610	$360	$160

Should the project be accepted or rejected?

• accepted

• rejected

Answer 1

Since the discounted payback period = 2.53 years which is less than the Maximum allowable discounted payback period 3 years.

So, Project C should be Accepted.