Question: Let us consider the same investment whose cost and expected cash flows are given in Question 1 using discounted payback period. cost is $ 3

Let us consider the same investment whose cost and expected cash flows are given in Question 1 using discounted payback period.

cost is $ 3 000 000 which is paid in 2020.

2021 $ 500 000

2022 $ 700 000

2023 $ 1 000 000

2024 $ 1 000 000

2025 $ 800 000

2026 $ 600 000

a) What is the exact payback period of that investment according to the discounted payback method if the relevant discount rate for that investment is 14%

b) Should the firm accept or reject this investment if the desired payback period of the investment is 3 years.

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