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Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8...

Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project C
Time: 0 1 2 3 4 5
Cash flow: –$2,200 $960 $840 $880 $540 $340

Should the project be accepted or rejected?

  • accepted

  • rejected

Solutions

Expert Solution

Solution :

The discounted payback statistic of Project C is 2.85 years. The maximum allowable discounted payback period is three years.

Since the discounted payback statistic of Project C at 2.85 years is lower than the maximum allowable discounted payback period of 3 years, the project should be accepted.

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago
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