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__Question 13__

Given a risk-adjusted discount rate of 14%, calculate the discounted payback period for the following cash flow of a project. If the maximum target discounted payback period is 3 years, comment on the financial acceptability of the project.

(a) Accept the project, as the target payback period is 3, which is shorter than the adjusted payback period of 2.32.

(b) Turn down the project, as the adjusted payback period is 4.23, which is longer than the target period of 3 years.

(c) Turn down the project, as the target payback period is 3, which is shorter than the adjusted payback period of 3.79.

(d) Accept the project, as the adjusted payback period is 1.79, which is shorter than the target period of 3 years.

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Answered by JusticeElement2757 on coursehero.com

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