Ans 3.17 years, Reject
Reject since Discounted payback period of 3.17 years is more than maximum allowable discounted payback period of 3 years.
Year | Project Cash Flows (i) | DF@ 14% | DF@ 14% (ii) | PV of Project A ( (i) * (ii) ) | Cumulative Cash Flow |
0 | -1010 | 1 | 1 | (1,010.00) | (1,010.00) |
1 | 110 | 1/((1+14%)^1) | 0.877 | 96.49 | (913.51) |
2 | 490 | 1/((1+14%)^2) | 0.769 | 377.04 | (536.47) |
3 | 690 | 1/((1+14%)^3) | 0.675 | 465.73 | (70.74) |
4 | 690 | 1/((1+14%)^4) | 0.592 | 408.54 | 337.80 |
5 | 290 | 1/((1+14%)^5) | 0.519 | 150.62 | 488.41 |
6 | 690 | 1/((1+14%)^5) | 0.456 | 314.35 | 802.77 |
NPV | 802.77 | ||||
Discounted Payback Period = | 3 years + 70.74/408.54 | ||||
3.17 years |
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