Payback Period = 2.5 years,
So,
Initial Investment = 275,000 + 475,000 + 0.50(425,000)
Initial Investment = $962,500
Calculating NPV,
NPV = $437,767
The discounted payback period does not take the project's entrire life into account.
What information does the payback period provide? Suppose Omni Consumer Products's CFO is evaluating a project...
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