Ans Accepted
Since discounted payback period (2.53 years) is less than allwable payback period (3 years)
Year | Project Cash Flows (i) | DF@ 8% (ii) | PV of Project A ( (i) * (ii) ) | Cumulative Cash Flow | |
0 | -1300 | 1 | (1,300.00) | (1,300.00) | |
1 | 600 | 0.926 | 555.56 | (744.44) | |
2 | 570 | 0.857 | 488.68 | (255.76) | |
3 | 610 | 0.794 | 484.24 | 228.48 | |
4 | 360 | 0.735 | 264.61 | 493.09 | |
4 | 160 | 0.735 | 117.60 | 610.69 | |
NPV | 610.69 | ||||
Discounted Payback Period = | 2 years + 255.76 / 484.24 | ||||
2.53 years | |||||
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