NPV = $1,766.55; accept the project
NPV = -$892.19; reject the project
NPV = $1,288.94; accept the project
NPV = -$3,577.90; reject the project

Posted: December 24th, 2022
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the NPV decision to evaluate this project; should it be accepted or rejected?
Time | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
Cash flow($s) | -85000 | 12000 | 11000 | 13000 | 21000 | 31000 | 32000 |
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