Question: Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years.

Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years.

Project B

Time: 0 1 2 3 4 5

Cash flow: $ 11,100 $ 3,360 $ 4,200 $ 1,540 $ 0 $ 1,020

What is the payback in years?

Should the project be accepted or rejected?

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