Question

Project L requires an initial outlay at t = 0 of $65,000, its expected cash inflows are $15,000 per year for 9 years, and its WACC is 10%. What is the project's discounted payback? Do not round intermediate calculations. Round your answer to two decimal places.

................. years

Answer 1

Ans 5.96 years

Year	Project Cash Flows (i)	DF@ 10%	DF@ 10% (ii)	PV of Project A ( (i) * (ii) )	Cumulative Cash Flow
0	-65000	1	1	(65,000.00)	(65,000.00)
1	15000	1/((1+10%)^1)	0.909	13,636.36	(51,363.64)
2	15000	1/((1+10%)^2)	0.826	12,396.69	(38,966.94)
3	15000	1/((1+10%)^3)	0.751	11,269.72	(27,697.22)
4	15000	1/((1+10%)^4)	0.683	10,245.20	(17,452.02)
5	15000	1/((1+10%)^5)	0.621	9,313.82	(8,138.20)
6	15000	1/((1+10%)^6)	0.564	8,467.11	328.91
7	15000	1/((1+10%)^7)	0.513	7,697.37	8,026.28
8	15000	1/((1+10%)^8)	0.467	6,997.61	15,023.89
9	15000	1/((1+10%)^9)	0.424	6,361.46	21,385.36
		NPV	21,385.36
Discounted Payback Period =		5 years + 8138.20/8467.11
		5.96 years