Question: Acme, Inc. is considering a four-year project that has initial outlay or cost of $100,000. The respective cash inflows for years 1, 2, 3 and
Acme, Inc. is considering a four-year project that has initial outlay or cost of $100,000. The respective cash inflows for years 1, 2, 3 and 4 are: $50,000, $40,000, $30,000 and $20,000. Acme uses the discounted payback period method, and has a discount rate of 11.50%. Will Acme accept the project if it's payback period is 37 months?
| A. | Yes, because it pays back in less than 37 months. | |
| B. | No, because it pays back in over 37 months. | |
| C. | No, because it pays back in over 38 months. | |
| D. | No, because it pays back in over 40 months. |
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