Question

Item11 Item 11 Item 11 An investment project costs $10,000 and has annual cash flows of $2,820 for six years. a. What is the discounted payback period if the discount rate is zero percent? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period if the discount rate is 4 percent? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period if the discount rate is 19 percent? (Enter 0 if the project never pays back. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Solution:

a. The discounted Payback period if the discount rate is 0 % is = 3.55 years

b. The discounted Payback period if the discount rate is 4 % is = 3.90 years

c. The discounted Payback period if the discount rate is 19 % is = 0 years

Please find the attached screenshots of the excel sheet containing the detailed calculation for the solution.