An investment project has annual cash inflows of $5,700, $6,800, $7,600 for the next four years, respectively, and $8,90...
An investment project has annual cash inflows of $5,700, $6,800, $7,600 for the next four years, respectively, and $8,900, and a discount rate of 13 percent. What is the discounted payback period for these cash flows if the initial cost is $9,000?
Multiple Choice
3.48 years
2.49 years
1.24 years
0.74 years
1.74 years
Homework Answers
Discounted payback period=full years until recovery + unrecovered cost at the start of the year/cash flow during the year
= 1 year + ($9,000 - $5,044.25)/$5,325.40
= 1 year + 3,355.75/ $5,325.40
= 1 year + 0.7428
= 1.7428.
Therefore, the discounted payback period is 1.74 years.
Hence, the answer is option e.
In case of any query, kindly comment on the solution
Add Answer to:
An investment project has annual cash inflows of $5,700, $6,800, $7,600 for the next four years, respectively, and $8,90...
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