Suppose your firm is considering investing in a project with the cash flows as follows; that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively.
TIME CASH FLOWS
0 -100,000
1 30,000
2 45,000
3 55,000
4 30,000
5 10,000
- Calculate the NPV and use the NPV technique to evaluate this project; should it be accepted or rejected and why?