A proposed new venture will cost $175,000 and should produce annual cash flows of $48,500, $85,000,...

80.2K

Verified Solution

Question

Finance

A proposed new venture will cost $175,000 and should produceannual cash flows of $48,500, $85,000, $40,000, and $40,000 forYears 1 to 4, respectively. The required payback period is 3 yearsand the discounted payback period is 3.5 years. The required rateof return is 9 percent. Which methods indicate project acceptanceand which indicate project rejection?
a) The payback period is _ and the project should be(accepted/rejected)
b) The discounted payback period is ___ and the projectshould be (accepted/rejected) _
c) The NPV is ___ and the project should be(accepted/rejected) _
d) The IRR is _ and the project should be(accepted/rejected) ___
e) The profitability index is _ and the project shouldbe (accepted/rejected) _________

Answer & Explanation Solved by verified expert

4.2 Ratings (542 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

A proposed new venture will cost $175,000 and should produceannual cash flows of $48,500, $85,000, $40,000, and $40,000 forYears 1 to 4, respectively. The required payback period is 3 yearsand the discounted payback period is 3.5 years. The required rateof return is 9 percent. Which methods indicate project acceptanceand which indicate project rejection?a) The payback period is _______ and the project should be(accepted/rejected) __________b) The discounted payback period is _________ and the projectshould be (accepted/rejected) _____c) The NPV is ___________ and the project should be(accepted/rejected) _____________d) The IRR is ___________ and the project should be(accepted/rejected) _____________e) The profitability index is ___________ and the project shouldbe (accepted/rejected) _____________