In: Finance
What is the discounted payback period for the investment project that has the following cash flows, if the discount rate is 14 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Year Cash Flows
0 -13779
1 4470
2 5005
3 5877
4 6626
Ans 3.52 years
Year | Project Cash Flows (i) | DF@ 14% (ii) | DF@ 14% (ii) | PV of Project A ( (i) * (ii) ) | Cumulative Cash Flow |
0 | -13779 | 1 | 1 | (13,779.00) | (13,779.00) |
1 | 4470 | 1/(1+14%)^1 | 0.877 | 3,921.05 | (9,857.95) |
2 | 5005 | 1/(1+14%)^2 | 0.769 | 3,851.18 | (6,006.76) |
3 | 5877 | 1/(1+14%)^3 | 0.675 | 3,966.81 | (2,039.95) |
4 | 6626 | 1/(1+14%)^4 | 0.592 | 3,923.12 | 1,883.17 |
NPV | 1,883.17 | ||||
Discounted Payback Period = | 3 years + 2039.95 / 3923.12 | ||||
3.52 years |