An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years,...

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years, respectively, and $8,500, and a discount rate of 20 percent.

What is the discounted payback period for these cash flows if the initial cost is $8,000?

Expert Solution

Discounted PBP
Time	Amount	PVf at 20%	PV	Cumulative
-	(8,000.00)	1.0000	(8,000.00)	(8,000.00)
1.00	5,300.00	0.8333	4,416.67	(3,583.33)
2.00	6,400.00	0.6944	4,444.44	861.11
3.00	7,200.00	0.5787	4,166.67	5,027.78
4.00	8,500.00	0.4823	4,099.15	9,126.93
Discounted PBP = 1 + 3583.33/444.44
Discounted PBP = 1 + .81 Years
Discounted PBP = 1.81 Years

jeff jeffy answered 2 years ago

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