An investment project costs $22,463 and has annual cash flows of $12,376 for six years. What...

An investment project costs $22,463 and has annual cash flows of $12,376 for six years. What is the discounted payback period if the discount rate is 19 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=1.19^-a		c	d=c*b	e
0	1.0000		$ -22,463	$ -22,463	$ -22,463
1	0.8403		$ 12,376	$ 10,400	$ -12,063
2	0.7062		$ 12,376	$ 8,739	$ -3,324
3	0.5934		$ 12,376	$ 7,344	$ 4,021
4	0.4987		$ 12,376	$ 6,172	$ 10,192
5	0.4190		$ 12,376	$ 5,186	$ 15,378
6	0.3521		$ 12,376	$ 4,358	$ 19,736

Discounted payback period		=	2+(3324/7344)
		=	2.45 Years

jeff jeffy answered 1 year ago

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