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Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6...

Compute the discounted payback statistic for Project C if the appropriate cost of capital is 6 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Project C Time: 0 1 2 3 4 5 Cash flow –$2,900 $1,240 $1,050 $1,090 $680 $480 Discounted payback period years Should the project be accepted or rejected? Rejected Accepted

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Answer :-

Cash Flow
Year Project(A) PVF@6% PV CCF
0 -2,900           1.000 -2,900.000
1 1,240           0.943    1,169.811 1,169.81
2 1,050           0.890       934.496 2,104.31
3 1,090           0.840       915.185 3,019.49
4 680           0.792       538.624 3,558.12
5 480           0.747       358.684 3,916.80
6 3,000           0.705    2,114.882 6,031.68
7 1,000           0.665       665.057 6,696.74
Discounted PBP
Project 2 + 796/915           2.870 Years

Here the Discount PBP is less than the maximum allowable period of 3 Years Hence the project is acceptable.

jeff jeffy answered 2 years ago
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