Problem 9-5 Calculating Discounted Payback [LO3] An investment project costs $10

Question

Problem 9-5 Calculating Discounted Payback [LO3]

An investment project costs $10,000 and has annual cash flows of $2,840 for six years.

What is the discounted payback period if the discount rate is zero percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

What is the discounted payback period if the discount rate is 5 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

What is the discounted payback period if the discount rate is 20 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

An investment project costs $10,000 and has annual cash flows of $2,840 for six years.

Explanation / Answer

Hello Pal,

First of all a very nice as well as intersting question from your side.

So now straight to the question, as asked above with all the information available from your side and from mine, the answer is as under:

After calculation of the above given information, we can conclude that the answer will be:

a) 4.25 years.

b) 3.26 years.

c) 2.49 years.

That is all I can say from the above given information by you, hope have solved your problem to some extent.

Regards.

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