Consider the previous question with the following details: A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details: Period 0: Cash flow = -$165.000 (Cost of project) Period 1: Cash flow = $85,000, Net Income = $47,500 Period 2: Cash flow = $66.000, Net Income = $28,500 Period 3: Cash flow = $50.000, Net Income = $12.500 Period 4: Cash flow = $50.000, Net Income = $12.500 Average Book Value = $75,000 The required annual return on projects of this risk is 8%. The company is trying to determine whether or not to accept this project. They use the discounted pay back period method of evaluation and their decision rule is that they need to be paid back, ona discounted basis, within 3 years. True or False: Based on their evaluation method and decision rule, they SHOULD accept this project. OTrue O False

Consider the previous question with the following details: A company is considering a project that will last for 4 years with no residual value. The project has the following cash flows and details: Period 0: Cash flow = -$165.000 (Cost of project) Period 1: Cash flow = $85,000, Net Income = $47,500 Period 2: Cash flow = $66.000, Net Income = $28,500 Period 3: Cash flow = $50.000, Net Income = $12.500 Period 4: Cash flow = $50.000, Net Income = $12.500 Average Book Value = $75,000 The required annual return on projects of this risk is 8%. The company is trying to determine whether or not to accept this project. They use the discounted pay back period method of evaluation and their decision rule is that they need to be paid back, ona discounted basis, within 3 years. True or False: Based on their evaluation method and decision rule, they SHOULD accept this project. OTrue O False

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...

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