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An investment project costs $42,467 and has annual cash flows of $10,920 for six years. What...

An investment project costs $42,467 and has annual cash flows of $10,920 for six years. What is the discounted payback period if the discount rate is 5 percent? (Enter 0 if the project never pays back. Round your answer to 2 decimal places. (e.g., 32.16))

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Ans 4.44 years

Year Project Cash Flows (i) DF@ 5% DF@ 5% (ii) PV of Project A ( (i) * (ii) ) Cumulative Cash Flow
0 -42467 1 1                           (42,467.00)             (42,467.00)
1 10920 1/((1+5%)^1) 0.952                             10,400.00             (32,067.00)
2 10920 1/((1+5%)^2) 0.907                               9,904.76             (22,162.24)
3 10920 1/((1+5%)^3) 0.864                               9,433.11             (12,729.13)
4 10920 1/((1+5%)^4) 0.823                               8,983.91                (3,745.22)
5 10920 1/((1+5%)^5) 0.784                               8,556.11                  4,810.89
6 10920 1/((1+5%)^6) 0.746                               8,148.67                12,959.56
NPV                             12,959.56
Discounted Payback Period = 4 years + 3745.22 / 8556.11
4.44 years

jeff jeffy answered 1 year ago
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