You are considering an investment with the following cash flows. Your required return is 8%, you require a payback of 3 years and a discounted payback of 4 years. If your objective is to maximize your wealth, should you take this investment? Year. Cash Flow -50,000 20,000 20,000 3 20,000 4 20,000 -50,000 Select one: O a. No, because the project cash flows are not conventional. O b. Yes, because both the payback and the discounted payback are less than 2 years. O c. No, because the NPV is negative. O d. Yes, because the payback is 2.5 years. O e. Yes, because the discounted payback is less than 4 years.
You are considering an investment with the following cash flows. Your required return is 8%, you require a payback of 3 years and a discounted payback of 4 years. If your objective is to maximize your wealth, should you take this investment? Year. Cash Flow -50,000 20,000 20,000 3 20,000 4 20,000 -50,000 Select one: O a. No, because the project cash flows are not conventional. O b. Yes, because both the payback and the discounted payback are less than 2 years. O c. No, because the NPV is negative. O d. Yes, because the payback is 2.5 years. O e. Yes, because the discounted payback is less than 4 years.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 4CMA
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