Should Tangshan Mining company accept a new project if the company's maximum payback is 3.5 years and the project's initial after-tax cost is $5,000,000 followed by after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $700,000 in year 3, and $1,800,000 in year 4?
A) Yes, since the payback period of the project is less than the maximum acceptable payback period.
B) No, since the payback period of the project is more than the maximum acceptable payback period.
C) Yes, since the risk exposure of the project is less than the maximum acceptable risk exposure.
D) No, since the risk exposure of the project is more than the maximum acceptable risk exposure.
A) Yes, since the payback period of the project is less than the maximum acceptable payback period.
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