An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a discount...

An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a discount rate of 14%.

What is the discounted payback period for these cash flows if the initial cost is $7,000? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Discounted payback period years

What is the discounted payback period for these cash flows if the initial cost is $10,000? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Discounted payback period years

What is the discounted payback period for these cash flows if the initial cost is $13,000? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Discounted payback period years

Solutions

Expert Solution

The Discounted Payback Period (or DPP) is X + Y/Z
Here
• X = is the last time period where the cumulative discounted cash flow (CCF) was negative
• Y = is the absolute value of the CCF at the end of that period X
• Z = is the value of the DCF in the next period after X

Calculation of the Discounted payback period IF initial investment is $ 7000

Cumulative cash flows :-

Particulars	CF	PVF@14%	Discounted CF	Cumualtive DCF
Year 0	-7000	1	-7000	-7000
Year 1(x)	4200	0.877193	3684.210526	-3315.79(y)
Year 2	5300	0.769468	4078.177901(Z)	762.3884
Year 3	6100	0.674972	4117.326249	4879.715
Year 4	7400	0.59208	4381.394053	9261.109

Discounted payback period if initial investment is $ 7000 = 1years + 3315.79 /4078.177901 = 1 + 0.8130566 = 1.81 years

Calculation of the Discounted payback period IF initial investment is $ 10,000

Cumulative cash flows :-

Particulars	CF	PVF@14%	Discounted CF	Cumualtive DCF
Year 0	-10000	1	-10000	-10000
Year 1	4200	0.877193	3684.210526	-6315.79
Year 2(x)	5300	0.769468	4078.177901	-2237.61(y)
Year 3	6100	0.674972	4117.326249(z)	1879.715
Year 4	7400	0.59208	4381.394053	6261.109

Discounted payback period if initial investment is $ 10,000= 2years + 2237.61/4117.326249 = 2 + 0.5434623 = 2.54 years

Calculation of the Discounted payback period IF initial investment is $ 13,000

Cumulative cash flows :-

Particulars	CF	PVF@14%	Discounted CF	Cumualtive DCF
Year 0	-13,000	1	-13000	-13000
Year 1	4200	0.877193	3684.210526	-9315.79
Year 2	5300	0.769468	4078.177901	-5237.61
Year 3(X)	6100	0.674972	4117.326249	-1120.29(Y)
Year 4	7400	0.59208	4381.394053(Z)	3261.109

Discounted payback period if initial investment is $ 13,000= 3years + 1120.29/4381.394053 = 3+ 0.2546915 = 3.26years

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

An investment project has annual cash inflows of $5,800, $6,100, $6,900, and $8,200, and a discount...

An investment project has annual cash inflows of $5,800, $6,100, $6,900, and $8,200, and a discount rate of 14%. What is the discounted payback period for these cash flows if the initial cost is $8,100? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $11,610? (Do not round intermediate calculations. Round the final answer to 2...

An investment project has annual cash inflows of $3,300, $4,200, $5,400, and $4,600, and a discount rate of 15 percent.

An investment project has annual cash inflows of $3,300, $4,200, $5,400, and $4,600, and a discount rate of 15 percent.a.What is the discounted payback period for these cash flows if the initial cost is $6,000? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b.What is the discounted payback period for these cash flows if the initial cost is $8,100? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)c.What...

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years,...

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years, respectively, and $8,500, and a discount rate of 20 percent. What is the discounted payback period for these cash flows if the initial cost is $8,000?

An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, and a discount...

An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, and a discount rate of 14 percent. What is the discounted payback period for these cash flows if the initial cost is $6,200? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $8,300? (Do not round intermediate calculations and...

An investment project has annual cash inflows of $8,800, $7,900, $8,200, and $8,600, and a discount...

An investment project has annual cash inflows of $8,800, $7,900, $8,200, and $8,600, and a discount rate of 13 percent. If the initial cost is $24,400, the discounted payback period for these cash flows is_____ years. (Round your answer to 2 decimal places. (e.g., 32.16))

An investment project costs $17,200 and has annual cash flows of $4,200 for six years. ...

An investment project costs $17,200 and has annual cash flows of $4,200 for six years. a. What is the discounted payback period if the discount rate is zero percent? 4.10 4.18 4.01 4.45 3.75 b. What is the discounted payback period if the discount rate is 3 percent? 4.44 4.53 4.35 4.79 4.09 c. What is the discounted payback period if the discount rate is 20 percent? Never 1.02 3.98 3.35 4.35

A project has an initial cost of $14,500 and produces cash inflows of $4,600, $6,100, and...

A project has an initial cost of $14,500 and produces cash inflows of $4,600, $6,100, and $8,500 over the next three years, respectively. What is the discounted payback period if the required rate of return is 15 percent? a. 2.36 years b. 2.45 years c. 2.55 years d 2.62 years e. never

An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next...

An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next four years, respectively. The discount rate is 15 percent. What is the discounted payback period for these cash flows if the initial cost is $5,000? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $7,100? (Do...

An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next...

An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 11 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200? How would I do this with the calculator?

An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, for the next...

An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, for the next four years, respectively. The discount rate is 13 percent. What is the discounted payback period for these cash flows if the initial cost is $6,400? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period ______ years What is the discounted payback period for these cash flows if the initial cost is $8,500? (Do not round...

Subjects