Question: Problem 8-27 NPV, Payback (LO1, LO4) A project that costs $3,000 to install will provide annual cash flows of $650 for the next 6 years.

Problem 8-27 NPV, Payback (LO1, LO4)

A project that costs $3,000 to install will provide annual cash flows of $650 for the next 6 years. The firm accepts projects with payback periods of less than 4 years.

a. What is this project's payback period? (Round your answer to 3 decimal places.)

b. Will the project be accepted?

c-1. What is project NPV if the discount rate is 2%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

c-2. Should this project be pursued?

d-1. What is project NPV if the discount rate is 11%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

d-2. Should this project be pursued?

e. Will the firms decision change as the discount rate changes?


a.	Payback period	Years
b.	Will the project be accepted?
c-1.	NPV of the project if the discount rate is 2%
c-2.	Should this project be pursued?
d-1.	NPV of the project if the discount rate is 11%
d-2.	Should this project be pursued?
e.	Will the firms decision change as the discount rate changes?

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