Problem $20$

Intro

You are evaluating an investment project costing $$11,600$ initially. The project will provide $$3,000$ in after$-$tax cash flows in the first year and $$5,000$ each year thereafter for $4$ years. The maximum payback period for your company is $3$ years.

Your company's cost of capital is $13\%.$

Part $1$

Attempt $1/6$ for $10$ pts$.$

What is the discounted payback period for this project?

Part $2$

Attempt $\frac{1}{2}$ for $10$ pts$.$

Should your company accept this project based on the discounted payback period criterion?

Yes

No