Question

PAYBACK PERIOD Project L costs $55,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 10%. What is the project's payback? Round your answer to two decimal places. years

Answer 1

Year	Cash flows	Cumulative cash flow	DF	PV	Cunulative cash flow
0	$ -55,000.00	$ -55,000.00	1	$ -55,000.00	$ -55,000.00
1	$   12,000.00	$ -43,000.00	0.90909091	$   10,909.09	$ -44,090.91
2	$   12,000.00	$ -31,000.00	0.82644628	$     9,917.36	$ -34,173.55
3	$   12,000.00	$ -19,000.00	0.7513148	$     9,015.78	$ -25,157.78
4	$   12,000.00	$   -7,000.00	0.68301346	$     8,196.16	$ -16,961.61
5	$   12,000.00	$     5,000.00	0.62092132	$     7,451.06	$   -9,510.56
6	$   12,000.00	$   17,000.00	0.56447393	$     6,773.69	$   -2,736.87
7	$   12,000.00	$   29,000.00	0.51315812	$     6,157.90	$     3,421.03
8	$   12,000.00	$   41,000.00	0.46650738	$     5,598.09	$     9,019.11
	Payback	4.58		Discounted payback	6.44