Compute the payback statistic for Project X and recommend whether the firm should accept or...
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Accounting
Compute the payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 9 percent and the maximum allowable payback is four years.
| Time: | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash flow: | 1,000 | 75 | 100 | 100 | 0 | 2,000 |
Multiple Choice
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3.78 years, reject
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3.4375 years, accept
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4.4375 years, reject
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4.78 years, accept
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