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Project L requires an initial outlay at t = 0 of $65,000, its expected cash inflows...

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

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Expert Solution

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

jeff jeffy answered 1 year ago
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