Question

In: Finance

Net Cash Flows: -6,009,700        1,775,000           1,776,500          1,573,500       &

Net Cash Flows: -6,009,700        1,775,000           1,776,500          1,573,500          4,099,300

Net Cash Flows: -2,698,900        585,400               790,300           1,043,800         1,239,600

Net Cash Flows: -5,418,900       1,322,400           1,447,900           2,246,100         3,595,800

Target Rate of Return = 16.525%

What is the discounted payback period (DPP) for each of the net cash flows?

Solutions

Expert Solution

Hello

First Cashflow

Time Cashflows PVF PV Cummulative PV
0 -$60,09,700.00 1.0000 -$60,09,700.00 -$60,09,700.00
1 $17,75,000.00 0.8582 $15,23,278.27 -$44,86,421.73
2 $17,76,500.00 0.7365 $13,08,359.19 -$31,78,062.55
3 $15,73,500.00 0.6320 $9,94,510.59 -$21,83,551.95
4 $40,99,300.00 0.5424 $22,23,480.15 $39,928.19

DPBP = 3 years + (21,83,551.95/22,23,480.15) = 3.98 years

Second Cashflow

Time Cashflows PVF PV Cummulative PV
0 -$26,98,900.00 1.0000 -$26,98,900.00 -$26,98,900.00
1 $5,85,400.00 0.8582 $5,02,381.46 -$21,96,518.54
2 $7,90,300.00 0.7365 $5,82,041.24 -$16,14,477.29
3 $10,43,800.00 0.6320 $6,59,720.47 -$9,54,756.83
4 $12,39,600.00 0.5424 $6,72,365.04 -$2,82,391.79

DPBP = N/A

Third Cashflow

Time Cashflows PVF PV Cummulative PV
0 -$54,18,900.00 1.0000 -$54,18,900.00 -$54,18,900.00
1 $13,22,400.00 0.8582 $11,34,863.76 -$42,84,036.24
2 $14,47,900.00 0.7365 $10,66,351.40 -$32,17,684.83
3 $22,46,100.00 0.6320 $14,19,618.84 -$17,98,066.00
4 $35,95,800.00 0.5424 $19,50,379.31 $1,52,313.31

DPBP = 3 years + (17,98,066.00/19,50,379.31) = 3.92 years

Thanks!

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jeff jeffy answered 2 years ago
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