Question

l Show ei 4 Calculate Discounted Payback: An inyeszment project has anmial cash inflows of $3,175, $4,000, $4,770 and $4,500, for the next four years, respectively. The discount Tate is 9%. What is the discounted payback period for these cash flow flows if initial. costs are A)$ 5,850 B) $6,400 and C) $9,150?

Answer 1

if initial cost : $5,850 year cash flows 2 4 -$5,850 pv @ 9% $3,175 0.9174 $2,913 -$2,937 $4,000 0.8417 $3,367 $430 $4,770 0.7722 $3,683 $4,113 $4,500 0.7084 $3,188 $7,301 present value cumulative discounted cash flows -$5,850 $5,850 discounted payback period 1.87 1+(2937/3367) years 4 0 -$6,400 if initial cost : $6,400 year cash flows pv @ 9% present value cumulative discounted cash flows 1 $3,175 0.9174 $2,913 -$3,487 2 $4,000 0.8417 $3,367 -$120 3 $4,770 0.7722 $3,683 $3,563 $4,500 0.7084 $3,188 $6,751 -$6,400 $6,400 discounted payback period years 2.03 2+(120/3683)

1 0 -$9,150 if initial cost : $9,150 year cash flows pv @ 9% present value cumulative discounted cash flows scounted cash flows $3,175 0.9174 $2,913 -$6,237 2 $4,000 0.8417 $3,367 -$2,870 $4,770 0.7722 $3,683 $813 4 $4,500 0.7084 $3,188 $4,001 -$9,150 $9,150 discounted payback period 2.78 years 2+2870/3683)