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The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​...

The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​ $30,000 per year in Years 1 through​ 4, $35,000 per year in Years 5 through​ 9, and​ $40,000 in Year 10. This investment will cost the firm​ $100,000 today, and the​ firm's cost of capital is​ 10%. Assume cash flows occur evenly during the year. The discounted payback period is

A.

3.72 years.

B.

4.26 years.

C.

5.23 years.

D.

4.35 years.

Solutions

Expert Solution

Ans B. 4.26 years

The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of​ $30,000 per year in Years 1 through​ 4, $35,000 per year in Years 5 through​ 9, and​ $40,000 in Year 10. This investment will cost the firm​ $100,000 today, and the​ firm's cost of capital is​ 10%. Assume cash flows occur evenly during the year. The discounted payback period is 4.26 years

jeff jeffy answered 1 year ago
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