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An investment project costs $22,761 and has annual cash flows of $10,267 for six years. What...

An investment project costs $22,761 and has annual cash flows of $10,267 for six years. What is the discounted payback period if the discount rate is 5 percent?

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Expert Solution

Year Discount factor Cash Flow Present value of cash flow Cumulative present value of cash flow
a b=1.05^-a c d=c*b e
0      1.0000 $ -22,761 $       -22,761 $       -22,761
1      0.9524 $   10,267 $           9,778 $       -12,983
2      0.9070 $   10,267 $           9,312 $         -3,670
3      0.8638 $   10,267 $           8,869 $           5,199
4      0.8227 $   10,267 $           8,447 $         13,645
5      0.7835 $   10,267 $           8,044 $         21,690
6      0.7462 $   10,267 $           7,661 $         29,351
Discounted payback period = 2+(3670/8869)
= 2.41 Years

jeff jeffy answered 1 year ago
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