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Your firm is considering a project with the following cash flows. The firm has a...

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Your firm is considering a project with the following cash flows. The firm has a weighted average cost of capital of 6%. The firm usually accepts projects that payback in 4 years or less. Using what you know about discounted payback period, which of the following statements is true about the firm's project selection? Year CF 0-S2,000,000 1 $800,000 2 $600,000 3 -$200,000 4 $1,800,000 5 $400,000 6 S300,000 The project pays back its initial investment in 3.44 years, and the firm should reject the project. The project pays back its initial investment in 3.62 years, and the firm should accept the project. The project's initial investment earns a 13.25% return, and the firm should accept the project. None of the Above Your firm is interested in a project with a payback period of 2 years. The firm typically accepts projects that payback in three years or less. Based on this information, the firm should reject the project. True False

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