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What is Project B's Discounted Payback Period with a WACC of 9.75%? YEAR                       CASH...

What is Project B's Discounted Payback Period with a WACC of 9.75%?

YEAR                       CASH FLOWS

                             Project A              Project B

0                         -$1050                -$1050

1                             675                    360

2                             650                      360

3                                                           360

4                                                           360

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Answer #1

Ans:- Discounted Payback Period is calculated by

= No of years before discounted payback recovery + (Initial Investment - Cumulative cash flow in the before recovery) / Discounted cash flow in the year after recovery

= 3 years + ($1050 - $899.22) / $248.13 = 3.61 years

K11 for A E 1 2 3 B с D F Project B Intial Investment - $1050 CCF is cumulative cash flow Years Cash flow PVF @ 9.75% PV of c

K11 foc A D E F 1 2 B с Project B Intial Investment - $1050 Years Cash flow 1 360 3 4 CCF is cumulative cash flow PVF @ 9.75%

Therefore, the discounted payback period for the project B is 3.61 years.

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