An investment project has annual cash inflows of $3,800, $4,700, $5,900, and $5,

Question

An investment project has annual cash inflows of $3,800, $4,700, $5,900, and $5,100, for the next four years, respectively. The discount rate is 14 percent.

What is the discounted payback period for these cash flows if the initial cost is $8,600?

What is the discounted payback period for these cash flows if the initial cost is $11,600?

An investment project has annual cash inflows of $3,800, $4,700, $5,900, and $5,100, for the next four years, respectively. The discount rate is 14 percent.

What is the discounted payback period for these cash flows if the initial cost is $8,600?

What is the discounted payback period for these cash flows if the initial cost is $11,600?

Explanation / Answer

Answer:

Discounted Payback Period=2 years+(1650/3982)

=2.414 years

Discounted Payback period=3 years+668/3020

=3.22 years

Year Cash Flows P.V.F (14%) PV ($) Cumulative PV 0 -8600 1 -8600 -8600 1 3800 0.877192982 3333 -5267 2 4700 0.769467528 3616 -1650 3 5900 0.674971516 3982 2332 4 5100 0.592080277 3020 5352

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