An investment project has annual cash inflows of $6,600, $7,700, $8,500, and $9,

Question

An investment project has annual cash inflows of $6,600, $7,700, $8,500, and $9,800, and a discount rate of 11 percent. Required: What is the discounted payback period for these cash flows if the initial cost is $9,500? (Do not round your intermediate calculations.) rev: 09_18_2012 1.57 years 0.57 years 1.07 years 3.14 years 2.32 years

An investment project has annual cash inflows of $6,600, $7700, $8,500, and $9,800, and a discount rate of 11 percent Required What is the discounted payback period for these cash flows if the initial cost is $9,500? (Do not round your intermediate calculations.) O 1.57 years 0.57 years 1.07 years 314 years 2.32 years

Explanation / Answer

This would go on upto year 4.

Hence discounted Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

=1+(3554.05/6249.49)

which is equal to

=1.57 years(Approx)(A).

Year Cash flows Present value@11% Cumulative Cash flows 0 (9500) (9500) (9500) 1 6600 5945.95 (3554.05) 2 7700 6249.49 2695.44

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