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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 3 years ago
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