Question

An investment project has annual cash inflows of $4,000, $4,900, $6,100, and $5,300, for the next four years, respectively. The discount rate is 13 percent. What is the discounted payback period for these cash flows if the initial cost is $6,700? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $8,800? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $11,800? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years

Answer 1

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Year A B C 0 $ (6,700) S (8,800) $(11,800) 1 $ 4,000 $ 4,000 $ 4,000 2 $ 4,900 $ 4,900 $ 4,900 3 $ 6,100 $ 6,100 $ 6,100 4 $ 5,300 $ 5,300 $ 5,300 PVIF @13% 1.000 0.885 0.783 0.693 0.613 Discounted cash flows AT B $ (6,700) S (8,800) $(11,800) S $ 3,540 $ 3,540 $ 3,540 $ $ 3,837 $ 3,837 $ 3,837 S $ 4,228 $ 4,228 $ 4,228 S $ 3,251 $ 3,251 $ 3,251 $ Cumulative discounted cash flows B (6,700) S (8,800) S (11,800) (3,160) $ (5,260) $ (8,260) 677 S (1,423) $ (4,423) 4,905 $ 2,805 $ (195) 8,155 $ 6,055 $ 3,055 Discounted Payback period 1.82 Years =1+3160/3837 2.34 Years =2+1423/4228 3.06 Years =3+195/3251