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Suppose your firm is considering investing in a project with the cash flows shown below,...

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Finance

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 14 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Time 0 1 2 3 4 5 6
Cash Flow -1,010 110 490 690 690 290 690

Use the NPV decision rule to evaluate this project; should it be accepted or rejected?

Multiple Choice

  • $-555.82, reject

  • $802.77, accept

  • $1,812.77, accept

  • $704.18, accept

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