Question

Question 10 1 pts Tim Atter 46M Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback? WACC: 10% 3 Year Cash Flow 0 $900 1 $400 2 $430 $460 18 years 209 es 275 years 22 Hetov O BI $ lopo 00 pa dete $ $ 8 ( 3 4 5 6 7 8 9 O backspace EM lock والی E R T Y U O Р [ D F G H J K L -- enter ? prt SC с V B N M t shit alt

Answer 1

Discounted Payback period = 2.52 years

1 Year Cash Flow Discount Factor Discounted Cash Flows Cumm. Cash Flows Investment still to be covered 10% 0 -900 -900 400 0.909090909 363.6363636 363.64 -536.3636364 2 430 0.826446281 355.3719008 719.01 - 180.9917355 3 460 0.751314801 345.6048084 1,064.61 164.6130729 1 Discounted payback period = Year before positive cash flows + [Last Negative cash flow / Cash flow in year of first positive cash flow] Discounted payback period = Year 2 + ($180 / 345.6048] Discounted payback period 2.52 Discounted payback period = 2.52 years