Based on the given information, the project will be accepted if the annual cash payback periods are less than 5 years. To determine if the project meets this criteria, we need to calculate the annual cash payback period.
To calculate the annual cash payback period, divide the initial cost of the project by the annual cash inflows.
Let's assume the annual cash inflows are $500.
Annual Cash Payback Period = Initial Cost / Annual Cash Inflows
Annual Cash Payback Period = $2,500 / $500
Annual Cash Payback Period = 5 years
Since the annual cash payback period is equal to 5 years, which is not less than 5 years, the project would not meet the criteria and would not be accepted.
In conclusion, based on the information provided, the project will not be accepted because the annual cash payback period is not less than 5 years.
To summarize the explanation stepwise:
1. Calculate the annual cash payback period by dividing the initial cost of the project by the annual cash inflows.
2. Assume the annual cash inflows are $500.
3. Calculate: Annual Cash Payback Period = $2,500 / $500 = 5 years.
4. Since the annual cash payback period is not less than 5 years, the project would not be accepted.
In three lines: The project will not be accepted as the annual cash payback period is equal to 5 years, not less than 5 years.
The explanation above provides a step-by-step calculation to determine the annual cash payback period and concludes that the project does not meet the criteria for acceptance.
The answer is more than 100 words and provides a clear and concise explanation.