Question: Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below

Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 11 percent and the maximum allowable discounted payback is 3 years.

Time:012345Cash flow:-990 390 590 510 410 260

Multiple Choice

4.75 years, reject
2.43 years, accept
3.43 years, reject
2.75 years, accept

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