Question: Target Co. is evaluating a project with initial investment (at year 0) of $220,000 that is expected to produce annual profits of $35,000 for 9

Target Co. is evaluating a project with initial investment (at year 0) of $220,000 that is expected to produce annual profits of $35,000 for 9 years, starting in year 1. The firms cost of capital is 11.00% and their preferred payback period is 7 years or less. Will Target Co. accept or reject the project if they follow the payback rule?

Group of answer choices

The payback rule cannot be applied in this case.

Accept.

Not enough information.

Reject.

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