Question

Project L requires an initial outlay at t = 0 of $55,000, its expected cash inflows are $13,000 per year for 9 years, and its WACC is 7%. What is the project's discounted payback? Do not round intermediate calculations. Round your answer to two decimal places.

Answer 1

к 3 7% | Year Cashflow Pvf at 11% PV of Cashflow Cumulative Cashflow 0 -55000 -55000 -55000 13000 0.934579439 12149.53271 -42850.46729 712 13000 0.873438728 11354.70347 -31495.76382 13000 0.816297877 10611.8724 -20883.89142 4 13000 0.762895212 9917.637757 -10966.25367 13000 | 0.712986179 9268.820333 -1697.433333 13000 0.666342224 8662.44891 6965.015577 13000 0.6227497428095.746644 15060.76222 13000 0.582009105 7566.118359 22626.88058 9 13000 0.543933743 7071.138654 29698.01923 8 Discounted payback period = Number of years prior to full recovery + Unrecovered cost at start of year Cashflow during full recovery year 20 Discounted Payback period 5.20 years

A 1 FORMULA SHEET 0.07 Year Cashflow -55000 13000 13000 13000 13000 13000 16 13000 13000 13000 9 13000 Pvf at 11% PV of Cashflow =1/(1+$K$3)^15 =J5*K5 =1/(1+$K$3) 16 =J6*K6 =1/(1+$K$3)^17 =J7*K7 =1/(1+$K$3) 18 =J8*K8 =1/(1+$K$3) 19 =J9*K9 =1/(1+$K$3)^110 =J10*K10 =1/(1+$K$3)^111 =J11*K11 =1/(1+$K$3) 112 =J12*K12 =1/(1+$K$3)^113 =113*K13 =1/(1+$K$3) 114 =J14*K14 Cumulative Cashflow =L5 =M5+L6 =M6+L7 =M7+L8 =M8+L9 =M9+L10 =M10+L11 I=M11+L12 =M12+L13 =M13+L14 11 Discounted payback period = Number of years prior to full recovery + Unrecovered cost at start of year Cashflow during full recovery year 20 Discounted Payback period =I10+(-M10/L