Considering investing in project with the cash flows

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Reference no: EM131341408

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Time 0 1 2 3 4 5 6

Cash Flow -880 180 460 660 660 260 660

Use the PI decision rule to evaluate this project; should it be accepted or rejected?

1.37%, reject

137.73%, accept

-137.00%, reject

1.37%, accept

Reference no: EM131341408

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